Portrait of John K Grubb

Texas Divorce and Prenuptial Agreement

4550 Post Oak Place, Suite 201 • Houston, Texas 77027-3139

Phone: 713-877-8800 • Fax: 713-877-1229

Divorce Means Tax Consequences Too

A couple’s decision to divorce carries tax consequences with it, and the more assets and income between the two, the greater the consequences will be. In this post, we discuss a few of the important tax areas that divorce will impact.

For couples with dependent children, the dependency tax exemption will be an important part of their divorce settlement. If the couple ignores this altogether, the exemption automatically goes to the parent with custody of the children. One factor that couples may wish to consider when deciding who gets the dependency exemption is which spouse will be able to use it the most. If you make too little or too much, you may not be able to use the exemption when it comes to tax time. In this case, it makes sense to give the exemption to your ex-spouse.

There are other tax deductions pertaining to divorce that a person may be able to use. Alimony, or spousal support as some also call it, is income for the spouse receiving it. For the spouse paying it, he or she can deduct the payments. Some spouses may able to deduct their attorney fees, depending on how they file for their returns. Child support, in contrast, is never deductible.

Finally, spouses should be aware that the IRS determines their marital status for the entire year by looking at their status on December 31. If a person was divorced on December 31, the IRS considers him or her single for that entire year. This basic fact may have important tax implications for a divorcing couple.

Did tax planning play a big role in your divorce settlement? What were the factors involved?

John K. Grubb & Associates, P.C. – Houston divorce lawyers

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