Divorce Tax Questions for the New Year


Divorce Tax Questions for the New Year

income tax and divorce

As 2015 approaches, many divorcing couples are wondering how to handle the issue of income taxes. Unless you have a strong agreement already in place, taxes can be a source of contention between you and your former spouse. Here are some tips from the Men’s Legal Center to help you think about your tax situation from all angles:

  • Consider deductions. Many divorce agreements “split” the children between the couple if both partners provide about equal support for the children. For example, if a couple has two children, one parent may claim one and one may claim the other as a deduction. However, it may be worth your while to negotiate in order to claim both children as tax deductions, particularly if they are very young and you plan to pay for their college. Talk to your attorney about the long-term effects of any agreement.
  • Alimony is taxable. Many people do not realize that alimony can be considered income for tax purposes. Therefore, your former spouse will be required to pay taxes on any alimony paid to him or her. This can be a powerful motivator in the negotiation for alimony amounts, particularly if your spouse already has a high salary and the alimony would push him or her into another tax bracket. Furthermore, alimony counts as a deduction on your taxes, but only if you file separately.
  • Filing jointly and separately both have advantages. Depending on your situation, there may be advantages to filing both jointly and separately prior to the final decree of divorce. If you and your former partner have a good working relationship and can file jointly, you will probably save money by doing so. On the other hand, if you are paying large amounts of temporary spousal support and if you want the tax deduction, you must file separately. Run both scenarios if possible to see which benefits you both.
  • Remember other deductions. While it is easy to focus on children and alimony, there are many other possible deductions you can take. For example, taking on the mortgage of your family home may seem difficult, but you may also get a hefty tax deduction at the end of the year for the interest you pay on that loan. Consider all deductions before making any decisions.

The attorneys at the Men’s Legal Center are here to help you negotiate the best possible agreement in your divorce. Contact us today for more information.

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