DIY Divorce in Florida

Divorce & Tax Time

It's tax time again. I get a lot of tax questions from divorcing parents around this time of year. While I am no tax expert, here are some general things to keep in mind about divorce and taxes:

• Child support is not income
• Child support is not deductible
• Single parents may be eligible for the Earned Income Credit, depending on income
• Single parents may be eligible for Head of Household based on caring for child for more than 1/2 the year and paying more than 1/2 the expenses of a home

Check the IRS website for the publications about these tax topics, or consult a tax professional if you have questions about divorce and taxes.

 

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Earned Income Credit for 2011

The Earned Income Tax Credit helps you save more of your earnings and can even provide a refund. As a single parent, you may now qualify for this tax credit. Check with your tax professional or the EITC Assistant .

Here is the table for the 2010 earned income credit amounts. If you are a single parent, you may now qualify for the EIC, even if you did not previously qualify. Be sure to take advantage of the EIC and any tax breaks you may qualify for after your Florida divorce.

Earned Income Credit
Tax Year 2010
No. of Children	Maximum credit	Earned Income/AGI Each Less Than
0	$457	$13,460 ($18,470 if Married Filing Joint)
1	$3,050	$35,535 ($40,545 if Married Filing Joint)
2	$5,036	$40,363 ($45,373 if Married Filing Joint)
3 or more	$5,666	$43,352 ($48,362 if Married Filing Joint)
Taxpayers with investment income of more than $3,100 are not eligible for the credit.

Is a Florida DIY Divorce Really Cheaper?

 
Everyone seems to assume that a Florida do-it-yourself divorce is really cheaper. But is it really? I think it depends on how committed the divorcing couple is to doing it right. Often when people represent themselves they assume that they can make any agreements they want. While it is generally true, there are areas like child support, where the judge will have the final say.

By taking shortcuts and not having paperwork reviewed by a qualified Florida lawyer, you may create problems in the future. If you are not committed to learning about Florida divorce law and procedure, a do it yourself divorce may cost more in the long run. That's because, like most areas, it costs more to undo the problem than to solve it right the first time around. 

Those of you who know my story know that this blog and the DIY Divorce in Florida Crash Course were created when it cost my client over $18,000 to fix a DIY mistake. That's why I recommend you have your documents reviewed before you file them. In my experience, it is far less expensive in the long run to have your DIY divorce documents reviewed than to try to fix a mistake later.

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Single Parents: Don't Miss the Earned Income Tax Credit

 
The Earned Income Tax Credit can help you save more of what you earn. This credit lets you keep more earnings and can even provide a refund. As a single parent, you may now qualify for this tax credit. Check with your tax professional or the EITC Assistant .

I can't find the 2010 info. Here's what the 2009 amounts were:

Earned Income and adjusted gross income (AGI) must each be less than:

• $43,279 ($48,279 married filing jointly) with three or more qualifying children
• $40,295 ($45,295 married filing jointly) with two qualifying children
• $35,463 ($40,463 married filing jointly) with one qualifying child
• $13,440 ($18,440 married filing jointly) with no qualifying children

If your single parent income falls within the limits, be sure to take advantage of this tax credit.

Florida Divorce & Taxes - Alimony vs. Child Support

 
We continue the divorce and taxes theme here at DIY Divorce in Florida with the two top alimony rules.

• Alimony is taxable as income to the recipient but child support is not.
• Alimony is deductible for the paying spouse but child support is not.

If you received alimony this year, you will have to pay taxes on it. If you calculated a specific amount for alimony, you may have had to "gross up" the amount to cover taxes.

Because of this tax issue, you may want to consider alternate spousal support ideas that may be more tax beneficial. For example, you may want the family home as your settlement instead of a series of monthly payments. You won't pay income tax on the home like you would if you received monthly alimony payments. Plus, your mortgage interest will be deductible and you could build equity once the market stabilizes.