How the financial issues in a divorce are resolved can have significant implications regarding what sort of financial state a person will be in following the divorce. Thus, financial issues tend to be among some of the bigger issues in a divorce. There are many different factors that it can be important to keep in mind when in proceedings or negotiations regarding financial issues in a divorce. One of these is tax implications.
Many financial issues in a divorce can have tax implications for the divorcing parties.
One is alimony. If alimony payments end up being made in relation to a divorce, generally, the person making the payments is allowed to claim a tax deduction in relation to the payments and the payments will be counted as taxable income for the individual receiving the payments.
How property is divided in a divorce can also have significant tax implications for the divorcing parties. Certain assets in the marital estate may have particular tax issues associated with them.
At this point, it is worth pointing out one financial issue that can arise in a divorce that typically does not have direct tax implications. This issue is child support. Generally, receiving child support payments is not something that will increase a person’s taxable income and making child support payments is not a tax-deductible activity.
The tax implications of the various financial issues in a divorce have the potential to have significant financial impacts on the divorcing parties. Thus, tax implications can be an important thing to not forget about when trying to reach fair resolutions to the financial issues in a divorce.
Texas divorce attorneys can help individuals who have questions regarding what sorts of things can be impactful when it comes to financial issues in a divorce.
Source: Fox Business, “Taxes and Divorce, What You Need to Know,” Bonnie Lee, Dec. 1, 2014