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Preparing for post-divorce tax impact

For many divorcing couples, questions abound about the effect that the end of the marriage will have on their finances. North Carolina spouses may be interested in an article discussing the impact that a divorce has on a person's taxes.

There are multiple tax-related issues that a divorce brings up. The first is the timing of the change in filing status from married to single. This change can seriously impact tax obligations, so accuracy is important. Generally, a person's filing status is determined by their situation on Dec. 31 of the year in question. If the divorce has gone through by the end of the year, the taxpayer will file as single. However, if the couple is merely separated and not legally divorced at the end of the year, they will have to either file a joint return or married filing separately. Some single taxpayers can file as head of household if they are caring for a dependent minor.

Spousal support payments have income tax consequences as well. Alimony payments that have been either ordered or approved by the court are deductible by the payer and included as taxable income of the recipient. The Social Security number of the recipient needs to be included on the tax return of the spouse claiming the deduction. Spousal support payments that are made voluntarily are neither deductible nor included in taxable income.

Child support payments are treated differently than alimony. They are not considered income to the recipient nor can they be deducted by the paying parent. Legal fees incurred in obtaining tax advice relating to the divorce process or in attempting to be awarded spousal support are, however, deductible.

Source: Yuma News Now , "How Marriage And Divorce Can Impact Your Taxes", April 05, 2014

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