When preparing to end a marriage, many Florida couples consider how the change in their marital status will affect their taxes. Most understand that alimony is both a tax-deductible expense for the paying party, as well as a tax-triggering form of income for the recipient. However, there are a range of other ways that divorce can impact taxes, and savvy spouses will consider the timing of their divorce to minimize additional expense.
One of the most basic ways that divorce will affect taxes is through each taxpayer’s filing status. In many cases, filing as a married couples will reap tax benefits. As such, some couples will postpone finalizing their divorce until after the new year rolls around. Another way that divorce will bring about tax changes has to do with which parent will receive the right to claim a child or children as dependents. This does not always directly correlate to the living arrangements for each child, so it is best to consult with an attorney to decide if tax deductions should become part of the overall divorce negotiation strategy.
Spouses should also think about the mortgage tax deduction, and how they would be taxed should they decide to sell the home and divide the proceeds. This is an area where no two couples will have the same outcome. It is important to work through the issue with a family law attorney or financial advisor who specializes in tax matters.
Finally, Florida spouses should know that there are certain divorce expenses that are tax-deductible. Fees that are related to collecting alimony qualify, as do expenses for advising services for tax purposes or those related to income-producing property. If those situations apply, both spouses should ask their attorney for an itemized breakdown of charges, so that the proper amount can be included in next year’s tax return.
Source: nasdaq.com, “8 Ways To Make Divorce Less Taxing“, June 7, 2016
