Tax season has come and gone for 2013. However, taxes are not simply a reality to be dealt with every April. Several divorce and tax issues impact separating couples during the divorce process, immediately afterward and year-round. Failure to take certain tax-related considerations into your divorce planning, property separation agreement and child custody arrangements can directly impact your financial future. This simple fact makes it vitally important that you discuss tax-related issues with your family law attorney, whatever the nature of your dispute happens to be.
First, individuals constructing property division settlements should understand that spousal support is generally treated as taxable income. This means that each year that an individual receives spousal support, he or she will be required to report that support as income for tax purposes. As a result, some spouses may benefit from foregoing spousal support and opting to retain other assets that may not result in such a heavy and recurring tax consequence.
Second, parents will be surprised how often they are asked whether or not they can claim their children on their tax returns. The parent claiming a given child usually can also seek qualifying state and federal benefits for that child and can reap several financial benefits during tax season as a result of claiming that child. During child custody and support negotiations, it is important to determine who will reap these financial benefits by claiming the child on each year’s tax returns.
Finally, it is important to remember that taxes are a complicated process. Attempting to navigate new tax terrain during and immediately following divorce can be challenging. Especially because accurately filing your taxes shields you from certain liabilities, it is imperative that you seek out professional tax help at least during the first year or two after you have navigated a divorce. Once you understand what your tax benefits and burdens are, you may be able to tackle your taxes on your own. But in the wake of a divorce, it is ideal that you seek professional advice and make sure that your taxes get done correctly, guaranteed.
Source: Huffington Post, “Divorce Is Taxing in More Ways Than One,” Amy Koko, June 7, 2013