Dividing an IRA: 2019 Tax & Divorce Law
IRS Publication 504, Divorced or Separated Individuals is one of our favorite reference sources for tax issues relevant to our divorced or separated clients.
Tax-Free IRA Transfer for Couples Going Through Divorce. Divorce tax strategies and dividing an IRA.
Mason Comment 1: Although I am a CPA, I hire a CPA to do my taxes. Why? I can’t keep up with all of the changes in tax law. I have to worry about keeping up with divorce law. That’s enough for me. And, for you CPA’s, my accounting experience was in audit, not tax. I hope that makes sense.
Mason Comment 2: As you may know, we love IRS Publication 504 Divorced or Separated Individuals – 2019. It’s our “Cliff Notes” for our divorced and separated clients. Below are some quotes from that publication. Keep in mind the publication changes every year, so if these links are broken, there is likely a more recent version available. In future years, we may just make new pages and not update this one.
Individual Retirement Arrangements
The following discussions explain some of the effects of divorce or separation on traditional individual retirement arrangements (IRAs). Traditional IRAs are IRAs other than Roth or SIMPLE IRAs.
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 can deduct only contributions to your own traditional IRA.
IRA transferred as a result of divorce. The transfer of all or part of your interest in a traditional IRA to your spouse or former spouse, under a decree of divorce or separate maintenance or a written instrument incident to the decree, isn’t considered a taxable transfer. Starting from the date of the transfer, the traditional IRA interest transferred is treated as your spouse’s or former spouse’s traditional IRA.
IRA contribution and deduction limits. All taxable alimony you receive under a decree of divorce or separate maintenance is treated as compensation for the contribution and deduction limits for traditional IRAs.
For more information about IRAs, including Roth IRAs, see Pub. 590-A and Pub. 590-B.
Divorce & Taxes: Your 2019 Update
See Miles Mason, Sr.’s article which was the cover story for the Tennessee Bar Journal: Who Gets the Credit? Calculating the New Child Tax Credits in Your Parenting Plan.
See our Tennessee Family Law Blog post series on Divorce & Taxes 2019:
- IRS “Reminders” for Divorced or Separated Individuals
- IRS Requirements to Deduct Alimony on Your Tax Return
- General Tax Rules for Alimony After Divorce
- If You Qualify, You Want to File as Head of Household After Divorce
- 2019 Tax Law: Transfer of Property in a Divorce Settlement
- Are legal fees for divorce tax deductible in 2019?
- Dividing an IRA: 2019 Tax & Divorce Law
- Who Pays the Taxes on a QDRO Distribution after Divorce?
- Sale of Principal Residence after Divorce: 2019 Tax Law
- Assignment of Estimated Tax Payments in a Divorce
