A person's name is their identity. It defines the fabric of their being and lineage. Occasionally, a name change is warranted as a result of a divorce. It is a life-changing event for all involved. Adjustments are necessary to lifestyle, expenses must be re-evaluated and those interested in changing their name after a divorce should be aware that there are tax implications of doing so.
Residents of Michigan likely do not look forward to tax time every April. But, to avoid problems at tax time, recent divorcees in the State who have changed their name must ensure that there is not a mismatch between the name recorded with the Social Security Administration and the Internal Revenue Service.
In order to ensure the correct name, the SSA office Form SS-5, Application for a Social Security Card, must be completed along with proof of identity and supporting documentation such as an original copy or a certified copy of the divorce decree. A copy of the decree can be obtained from the courts. A name change cannot be requested until the divorce is finalized. At the time of filing federal income tax returns, a person's marital status on the last day of the year determines their filing status.
During the divorce process, a simple matter such as name may get complicated. But, it is important for the parties not lose sight of the bigger picture and to consider equitable division of assets, personal property, any real estate, bank accounts, retirement funds and debts. It is not an easy process and parties involved should make informed decisions when drafting language pertaining to any child custody, visitation, child support and alimony issues.
Going through a divorce can be taxing but parties can mutually agree to have a cost effective affordable divorce.
Source: Forbes, "Marriage Or Divorce Can Be A Name Changer," Kelly Phillips Erb, Aug. 1, 2012