Tax questions

March 20, 2000

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

My ex-wife and I separated in May 1998. We filed jointly for that year, and I continued to pay half our mortgage. My last payment on the house was in March 1999. I agreed to let her refinance the house, as I no longer would have any ownership. She did this at the end of September, and our divorce became official in December. I am not sure how I am supposed to file this year. Do I have any tax breaks from the mortgage interest up until September? And how are we both supposed to file? Note: The tax bill is due in July, and I paid the full tax bill in 1998 without her assistance.

Since you were divorced before the end of the tax year, you and your ex-wife are both single in the eyes of the IRS. However, one or both of you may qualify for more favorable Head of Household status if you have children.

You are entitled to deduct any property taxes you paid in 1998 since you were still a joint owner when you made the payment (unless you held the property as tenants in common, in which case only your half-share of the liability is deductible). This deduction would have to be taken on your 1998 return.

The deduction of the mortgage interest you paid through March 1999 is permitted, on the grounds that you were liable for the debt, you actually paid the expense and it qualifies as interest on "one other" residence because your wife lives there. A taxpayer is allowed to deduct interest on his primary residence and one other residence. After March, you did not actually pay the expense, so it is not available to you as a tax deduction, unless your divorce agreement specifically permits you to deduct all or part of it as alimony.

Wendy E. Martucci, CPA

Rowles & Co., Baltimore

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary. Selected questions will be answered in the Business section. No questions will be answered personally.

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