How can married couples hold property?

There are several ways of owning property after marriage, but keep in mind that they may vary from state to state. Here are the most common:

  • Sole Tenancy. Ownership by one individual. At death the property passes according to your will.
  • Joint Tenancy, with right of survivorship. Both spouses have equal ownership and an undivided interest in the property. Upon the death of one spouse, the property automatically transfers to the surviving spouse.This is an effective way of avoiding probate.
  • Tenancy in Common. Joint ownership of property without the right of survivorship. Each spouse owns a separate and distinct share of the property. At death, your share of the property passes according to your will.
  • Tenancy by the Entirety. Similar to Joint Tenancy, with right of survivorship. This is only available for spouses and prevents one spouse from disposing of the property without the others permission.
  • Community Property. In some states, referred to as community property states, married people own property, assets, and income jointly; that is, there is equal ownership of property acquired during a marriage. Community property states are AZ, CA, ID, LA, NV, NM, TX, WA, and WI.


What are the tax implications of divorce

After divorce, each individual will file their own tax return. However, there are several areas where transactions between former spouses can result in tax consequences. The most common areas are:

• Child Support — If you’re making child support payments, they aren’t deductible. If you receive child support, the amount you receive isn’t taxable.

• Alimony Paid — If you make payments under a divorce or separate maintenance decree or written separation agreement, you may be able to deduct them as alimony. This applies only if the payments qualify as alimony for federal tax purposes. Voluntary payments made outside a divorce or separation decree aren’t deductible. You must enter your spouse or
former spouse’s Social Security Number or Individual Taxpayer Identification Number on your Form 1040, Individual Tax Return, when you file.

• Alimony Received — If you get alimony from your spouse or former spouse, it’s 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 an estimated tax payment or increase the amount of tax withheld from your wages.

• Name Changes — If you legally change your name after your divorce, notify the Social Security Administration of the change. 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 delay your refund. You cannot apply for a card online. There is no charge for a Social Security card. This service is free.

• 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.


Health Care Law Considerations

• Special Marketplace Enrollment Period — If you lose your 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. Losing coverage through a divorce is considered a qualifying life event that allows you to enroll in health coverage through the Health Insurance Marketplace during a Special Enrollment Period.

• 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 were 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, and the Instructions for Form 8962 have more information about the Shared Policy Allocation. For more on this topic, see Publication 504, Divorced or Separated Individuals.


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