I got divorced earlier this year. I moved out of state early in the year, right after we filed, but the divorce was not final until May 1st. We had a mortage in both our names when we were married and had previously always been able to claim the mortage interest. He got the house, so he had it refinanced in his name and I signed the quit claim form after the divorce was final.

My question is, am I entitled to claim a portion of the mortgage interest up until May 1st, and if so, how do I go about that since all the paperwork will be mailed to him at the house? Or do I just let him claim it and ask for a portion of his return or something?

I have no idea how to approach having my taxes done in this situation, so I thought I'd start checking into it now. I also have a full-time job with employee status myself on top of a second job with contractor status in which I receive a 1099.

AtlantaTaxExpert

Any children? An important issue as to who claims the exemptions.

Yes, you are entitled to half of interest and real estate taxes until you signed the quit claim form. However, the Standard Deduction is $5,200, so unless the total exceeds that amount, it may make more sense to let him claim it and you as for a pro-rated portion of his refund in exchange.

As for the contractor job, you are liable for ALL of the Social Security and Medicare taxes. Unless your other job exceeds $90K, that means you have to put away at least one-third of each check for taxes. Also, where do you live? State taxes may be an issue.

qtrhrs02

No children. If I remember correctly, in previous years we paid about $15,000/yr in interest on the house, plus we had a second mortage for improvements, but it wasn't a very large amount and we didn't pay a lot of tax on that.

I don't make much with the contractor job, as it isn't my main source of income. That's probably only $10,000/yr. I do put away a percentage of my check and I also make sure that I am taxed as high as possible out of my employee checks to help cover any deficit. I live in CA, so I'm sure there are some state taxes, as they come out of my regular paycheck.

The info does help. Thanks.

AtlantaTaxExpert

Okay, that means your share of the interest would be about $2,500 (one-third of $15,000 split equally). Not enough to exceed the $5,200 Standard Deduction.

Contact your ex-spouse and offer to "sell" him your $2,500 deduction for about $800 (this assumes he is in the 25% tax bracket plus factors in the California tax break he would get by adding $2,500 onto his itemized deductions for California). His actual tax break would be about $875, so you both win!

qtrhrs02

Actually, he's in Michigan and he's in a higher tax bracket, but I'm not sure which one. He makes about $125,000/yr and I make about $55,000.

AtlantaTaxExpert

Okay, he's in the 28% tax bracket. Advice still applies.

qtrhrs02

Thank you!

AtlantaTaxExpert

Glad to help!