Tax Effects of Divorce or Separation
Looking for Work May Impact Your Taxes
Home Energy Tax Credits Save You Money at Tax Time
Effects of Divorce or Separation
you are divorcing or recently divorced, taxes may be the last
thing on your mind. However, these events can have a big
impact on your wallet. Alimony and a name or address
change are just a few items you may need to consider.
Here are some key tax tips to keep in mind:.
Child Support. Child support payments are not
deductible and if you received child support, it is not
Alimony Paid. You can deduct alimony paid to or for
a spouse or former spouse under a divorce or separation
decree, regardless of whether you itemize deductions.
Voluntary payments made outside a divorce or separation decree
are not deductible. You must enter your spouse's Social
Security Number or Individual Taxpayer Identification Number
on your Form 1040 when you file.
Alimony Received. If you get alimony from your
spouse or former spouse, it is taxable in the year you get it.
Alimony is not subject to tax withholding so you may need to
increase the tax you pay during the year to avoid a penalty.
To do this, you can make estimated tax payments or increase
the amount of tax withheld from your wages.
Spousal IRA. If you get a final decree of divorce
or separate maintenance by the end of your tax year, you can’t
deduct contributions you make to your former spouse's
traditional IRA. You may be able to deduct contributions you
make to your own traditional IRA.
Name Changes. If you change your name after your
divorce, be sure to notify the Social Security Administration.
File Form SS-5, Application for a Social Security Card. You
can get the form on SSA.gov or call 800-772-1213 to order it.
The name on your tax return must match SSA records. A name
mismatch can cause problems in the processing of your return
and may delay your refund. Health Care Law Considerations.
Special Marketplace Enrollment Period. If you lose
health insurance coverage due to divorce, you are still
required to have coverage for every month of the year for
yourself and the dependents you can claim on your tax return.
You may enroll in health coverage through the Health Insurance
Marketplace during a Special Enrollment Period, if you lose
coverage due to a divorce.
Changes in Circumstances. If you purchase health
insurance coverage through the Health Insurance Marketplace,
you may get advance payments of the premium tax credit. If you
do, you should report changes in circumstances to your
Marketplace throughout the year. These changes include a
change in marital status, a name change, a change of address,
and a change in your income or family size. Reporting these
changes will help make sure that you get the proper type and
amount of financial assistance. This will also help you avoid
getting too much or too little credit in advance.
Shared Policy Allocation. If you divorced or are
legally separated during the tax year and are enrolled in the
same qualified health plan, you and your former spouse must
allocate policy amounts on your separate tax returns to figure
your premium tax credit and reconcile any advance payments
made on your behalf. Publication 974, Premium Tax Credit, has
more information about the Shared Policy Allocation. For more
on this topic, see Publication 504, Divorced or Separated
Individuals. You can get it on IRS.gov/forms at any time.
Looking for Work May Impact Your Taxes
you are looking for a job in the same line of work, you may be
able to deduct some of your job search costs.
Here are some key tax facts you
should know about when searching for a new job:
Same Occupation. Your expenses must be for a job
search in your current line of work. You can’t deduct expenses
for a job search in a new occupation.
Resume Costs. You can deduct the cost of preparing
and mailing your résumé.
Travel Expenses. If you travel to look for a new
job, you may be able to deduct the cost of the trip. To deduct
the cost of the travel to and from the area, the trip must be
mainly to look for a new job. You may still be able to deduct
some costs if looking for a job is not the main purpose of the
Placement Agency. You can deduct some job placement
agency fees you pay to look for a job.
First Job. You can’t deduct job search expenses if
you’re looking for a job for the first time.
Time Between Jobs. You can’t deduct job search
expenses if there was a long break between the end of your
last job and the time you began looking for a new one.
Reimbursed Costs. Reimbursed expenses are not
Schedule A. You normally deduct your job search
expenses on Schedule A, Itemized Deductions. Claim them as a
miscellaneous deduction. You can deduct the total
miscellaneous deductions that are more than two percent of
your adjusted gross income.
Premium Tax Credit. If you receive advance payments
of the premium tax credit, it is important that you report
changes in circumstances – such as changes in your income, a
change in eligibility for other coverage, or a change of
address – to your Health Insurance Marketplace. Advance
payments are paid directly to your insurance company and lower
the out-of-pocket cost for your health insurance premiums.
Reporting changes will help you get the proper type and amount
of financial assistance so you can avoid getting too much or
too little in advance.
For more on job hunting refer to Publication 529,
Miscellaneous Deductions. You can get IRS tax forms and
publications on IRS.gov/forms at any time.
Home Energy Tax
Credits Save You Money at Tax Time
energy-efficient home improvements can cut your energy bills
and save you money at tax time.
Here are some key facts that you should know about home
energy tax credits:
> Non-Business Energy Property Credit
Part of this credit is worth 10 percent of the cost of certain
qualified energy-saving items you added to your main home last
year. This may include items such as insulation, windows,
doors and roofs.
The other part of the credit is not a percentage of the cost.
This part of the credit is for the actual cost of certain
property. This may include items such as water heaters and
heating and air conditioning systems. The credit amount for
each type of property has a different dollar limit.
This credit has a maximum lifetime limit of $500. You may only
use $200 of this limit for windows.
Your main home must be located in the U.S. to qualify for the
Be sure you have the written certification from the
manufacturer that their product qualifies for this tax credit.
They usually post it on their website or include it with the
product’s packaging. You can rely on it to claim the credit,
but do not attach it to your return. Keep it with your tax
You must place qualifying improvements in service in your
principal residence by Dec. 31, 2016.
> Residential Energy Efficient Property Credit
This tax credit is 30 percent of the cost of alternative
energy equipment installed on or in your home.
Qualified equipment includes solar hot water heaters, solar
electric equipment, wind turbines and fuel cell property.
Qualified wind turbine and fuel cell property must be placed
into service by Dec. 31, 2016. Hot water heaters and solar
electric equipment must be placed in to service by Dec. 31,
The tax credit for qualified fuel cell property is limited to
$500 for each one-half kilowatt of capacity. The amount for
other qualified expenditures does not have a limit. If your
credit is more than the tax you owe, you can carry forward the
unused portion of this credit to next year’s tax return. • The
home must be in the U.S. It does not have to be your main
home, unless the alternative energy equipment is qualified
fuel cell property.
Use Form 5695, Residential Energy Credits, to claim these
credits. For more on this topic refer to the form’s
instructions. You can get IRS forms on IRS.gov/forms anytime.
Don't hesitate to call us if you
need help or want to
get started on tax planning for the remainder of 2016 or for
2017 already! If you have comments or questions on the information in these
articles, as usual feel free to call our offices.
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