Are my income taxes affected by divorce in Texas?

Though there are some general precepts, the rules and laws of divorce taxation can often be exceedingly complex. So when it comes to taxes affected by divorce in Texas, caution is urged with respect to this particular area—and if you have any specific questions about how your particular situation is going to be taxed, be sure to check with your attorney or tax accountant.

Are my income taxes affected by divorce in Texas?

Transferred Property

When it comes to taxes affected by divorce in Texas, as a general rule, there is no recognition of gain or loss on a transfer of property from one spouse to another spouse, if such transfer is made incident to or related to a divorce.

Retirement Benefits

Though the distribution of retirement benefits, including IRAs, to a spouse in a divorce is not a taxable event, a withdrawal of benefits, when made, is usually subject to taxation.

Alimony

For alimony, only cash payments can qualify as taxable alimony. Further, the payments must be received under a divorce decree or settlement agreement. The alimony agreement must also not state that the payments are not taxable. Divorced spouses must live in separate households. The obligation to make payments must terminate upon the death of the recipient. The payments may not be in the nature of child support.

Filing As Single

Filing status as single or married depends, in part, on the taxpayer’s marital status on the last day of the tax year. If you are divorced during the year and do not remarry before the end of the year, you will file as single. On that return, unless certain conditions apply, you must report one-half of all community income prior to your divorce and 100% of it after your divorce. Also, you will claim half of all tax pre-payments made prior to divorce, and 100% of the payments you make after the divorce.

Randall B. Wilhite is a family law attorney, CPA, and mediator who practices in the Houston office of the law firm Fullenweider Wilhite.