In the midst of the many complicated issues brought about by divorce, a New York reader may not consider how this legal step will impact taxes. Financial support and property division are some of the most important and contentious aspects of ending a marriage, but frequently, people forget to give careful consideration to the long-term consequences of these major issues. The tax consequences of divorce can be costly and significant.
A person who has filed for divorce or received the final divorce decree within the last calendar year will file as unmarried. As a person's filing status changes, it could also impact what a person will pay in taxes and the amount of deductions permissible. Property division does not always have an impact on finances, but there are exceptions, and a person would be wise to explore all possibilities before making major decisions.
If a person is paying alimony, that amount is tax deductible. However, if a person receives alimony, that amount is taxable in the year that the payments are made. Child support payments are not deductible for the payer, nor are they taxable for the recipient.
Divorce is difficult in many ways, and it is important to make decisions that lay the foundation for a strong financial future. By working closely with an experienced New York divorce attorney, a person can emerge from the process with financial stability intact. In order to protect financial interests and to better understand the tax and financial consequences of divorce, it is best to begin with a complete case evaluation.
Source: willitsnews.com, "Taxes and Finance: The taxing side of divorce", James Angell, Nov. 8, 2016