For many Maryland spouses, the only thing less anticipated than the divorce process is the annual tax season. When the two processes combine, individuals who are going through a divorce have a challenge ahead. Tax returns filed while a couple is separated, as well as the first return for the year of a divorce, present unusual scenarios in which one's tax return is often very different from the years prior to this significant life event. Knowing how to maximize one's deductions can make a world of difference in the bottom line.
When claiming deductions associated with a divorce, many spouses are surprised to learn that there are very few divorce-related expenses that can be put to good use. One of those lies in legal fees. While the bulk of legal fees connected to a divorce are not eligible to be claimed as deductions, a select few types of fees are.
Specifically, individuals can claim a portion of the cost of obtaining legal advice related to the tax consequences of various divorce choices. However, the amount claimed must exceed two percent of the filer's adjusted gross income, or AGI. The same goes for legal fees incurred while trying to collect alimony. These fees are permitted to be deducted due to the fact that any alimony that is awarded will become taxable income for the recipient.
When preparing those first few post-divorce tax returns, it may be well worth the time and expense to hire a tax professional. He or she can work through your divorce expenses and determine which, if any of those costs can be used to lower your tax obligation. Moving through a Maryland divorce is enough of a challenge for one year, and there is no need to complicate matters by filing a tax return that is inaccurate.
Source: The Huffington Post, What's Deductible for Legal Fees When Couples Divorce, Julian Block, Feb. 3, 2014