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Divorce and Taxes: Tax consequences!

Are you getting divorced? You receive a compensatory allowance, an alimony ? You don’t know how to declare your income tax the year of your divorce? This section explains the tax consequences of your divorce.

Everything you need to know about the tax consequences of your divorce!

You will be taxed separately for income tax purposes

The year of your separation you will be taxed separately for the whole year.

Example: you divorce in December 2016, you will file your income tax return in May 2017 for 2016 income separately for the entire year of 2016, without pro rata.

In many cases the divorce decree has not been issued, but you are still separated. When does the joint taxation of the spouses end?

You can declare separate taxation if you are divorcing and have received permission to reside separately.

You will find this authorization of separate residence in the order of non reconciliation, or even before this order, it is possible that in your initial request you asked the judge for an authorization to reside separately as an urgent measure.

Example: Your non-reconciliation order is from December 2016, the divorce decree took place in January 2017, you file your income tax return separately in May 2017 for the 2016 income.

Are you dropping your divorce proceedings during the year?

You have been authorized to reside separately however you abandon the divorce proceedings and you wish to benefit from a joint taxation, you will have to bring the proof that you have resumed living together with your spouse (by transmitting to the Service des impôts des particuliers a document issued by the court which specifies that you have dropped the divorce proceedings).

By abandoning the divorce proceedings, you will file a joint return for the entire year.

Which income should be declared ?

In the year of separation you declare your own income. You also declare the portion that you have in the joint income (e.g. rent received from an apartment that belongs to both of you).

You must be able to prove the share of the joint income to which you are entitled, otherwise you will have to declare half of the joint income and your ex-spouse will do the same for the other half. The same applies to the deduction of deficits for the year. For the deficits that can be carried forward and that are prior to the year of divorce, they are divided equally between you and your spouse.

Example: You have land deficit dating from 2015 up to 10,000 euros reportable, you divorce in 2016, you will declare separately your income tax form in May 2017 by deducting 5000 euros of land deficit and your spouse will do the same.

The attachment of children to the tax household

If you have sole custody of your children?

You can declare your child as entirely under your care, your spouse will not be able to do so. Your child’s share will increase your family quota, and you will have to include all of your children’s income.

Regardless of when you separate during the year, you will declare your child as a dependent for the entire year.

You can benefit from an additional half share if you are a single parent. To be a single parent, you must be

  • single or divorced living alone ;
  • and be the sole or main provider for at least one child.

If you have alternating custody of your children ?

You declare that you are responsible for half of your child’s expenses, and your spouse will do the same. You will also divide your child’s share by two and include half of your children’s income in the statement, your spouse will do the same.

Your spouse is paying you child support

You will declare this alimony in addition to your income, but you benefit from your child’s share. Your spouse will deduct this support, but will not benefit from the child’s share.

You pay a compensatory allowance to your former spouse

Are you paying the compensatory allowance over a period of up to 12 months?

You : You can benefit from a tax reduction equal to 25% of the amount that will be withheld within the limit of €30,500 for the entire 12-month period (i.e., a maximum tax reduction of €7,625).

  • Your spouse: If you receive a compensatory allowance paid over a period of less than 12 months, it does not constitute income and is not taxable.

You pay the compensatory allowance over a period of more than 12 months?

  • You : You do not benefit from a tax reduction but you can deduct the payments made from your overall gross income.
  • Your spouse: If you receive a compensatory allowance paid over a period of more than 12 months, this sum constitutes taxable income in the same way as a pension. This allowance may be treated as exceptional income and subject to the quotient system.

You will be taxed separately for the solidarity tax on wealth

You will be taxed separately for wealth tax purposes even before the divorce is pronounced if you are in the process of separating or authorized to reside separately.

If your minor child has any property, you must include this property in your tax return in its entirety if you alone have parental authority. In most cases, parental authority will continue to be shared with your ex-spouse, so you must include half of the value of your child’s property in your tax return.

You will continue to be jointly taxed for the year of your divorce

The council tax must be established in the name of the person who has the actual use of the dwelling on 1st January of the year. If you lived under the same roof as your spouse on January 1st of the year of your separation, only one council tax will be established.

You remain jointly and severally liable for the payment of taxes due during your divorce

For the duration of your joint taxation, you are jointly and severally liable with your spouse for the payment of income tax, wealth tax and council tax. Of course, in the year of your separation, your joint and several liability ends. However, you remain jointly and severally liable for the years before your divorce.

It is possible that your spouse concealed income during the period of joint taxation. Thus, after your divorce you may receive an income tax adjustment for a year prior to your divorce.

You are jointly and severally liable for the payment of this reassessed tax even if you are separated, because the reassessment concerns a year in which you were jointly taxed.

The only way for you not to pay this tax adjustment is to ask for a discharge of joint and several liability. To do so, you must prove 3 things:

  • You no longer live together with your spouse;
  • the amount of the tax debt is disproportionate to your financial situation and assets;
  • you have fulfilled your tax obligations since the separation without fraudulently evading taxes.

You are divorced? You don’t know how to fill out your tax return? Are you being asked to pay a tax debt as part of the solidarity between spouses? Contact an AGN lawyer in your area, who will help you optimize your tax situation after your divorce. 

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