Not only can
divorce change your lifestyle, but also how you file your taxes. Ignoring the
tax implications can consequences of divorce can make the divorce process
The following are the most common tax consequences of divorce:
Tax filing status – Beginning in Year 1 of the divorce, you can no longer file “married,
Dependency exemption – Only the custodial parent has the right to claim the child as
a dependent. However, if both parents share equal parenting time, then
it is the parent who pays for
child support. If neither parent pays child support despite splitting equal time with
the child, the higher adjusted gross income will have exemption.
Alimony – Under current law, alimony is taxable income to the receiving
spouse, while paying spouse can deduct alimony paid for federal income
tax purposes. However, after Dec. 31, 2018, the new tax law takes away
the deduction for alimony payments, so recipients will no longer have
to include alimony payments in taxable income.
Dividing property – If one spouse buys the other out of the marital home, the buying
spouse will also maintain these tax deductions moving forward. However,
if you decide to sell the marital home, there are several tax issues that
need to be taken into consideration based on the circumstances leading
up to the sale. For instance, if one spouse decides to live in the home
pending its sale and continues to pay the mortgage interest and taxes,
then he/she would take all of the deductions on their return. If both
spouses are still living together in the home pending the finalization
of the divorce and are sharing all the interim expenses, they will typically
agree to equally split all mortgage interest and taxes paid up until the
day that one spouse moves from the home permanently.
For more information,
contact our Daytona Beach divorce lawyer at
Stepniak & Park today.