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Tax implications of divorce may be unanticipated

When a marriage ends, emotions run high -- especially if there are children involved. Uncertainty may exist about who will get child custody and how much child support will be paid. Working on a parenting and visitation plan, along with the potential contention related to property division, may overshadow other important issues. One of these issues is taxes, and the impact taxes can have on the post-divorce financial stability of individuals in Kentucky.

Alimony payments made to a former spouse are tax deductible. This is true for divorced couples or for those who are legally separated, and deductions need not be itemized. However, voluntary payments made to provide support that is not part of the divorce decree are not deductible. The person receiving alimony payments must pay tax on it in the year that the payments are received.

On the other hand, child support payments do not incur tax. The person paying child support will not be able to declare it as a tax-deductible expense. The parent on the receiving end of child support payments will not be taxed on it. Then there is the question about spousal IRA. If the final divorce decree is issued and received before the end of the current tax year, deductions for contributions to the traditional IRA of an ex-spouse will not be allowed.

Kentucky residents who are considering divorce may want to be as prepared as possible for the impact it will have on their futures. It is not uncommon for individuals to have many unanswered questions related to the legal proceedings of divorces and other issues, such as who will declare a child as dependent on tax returns. An experienced divorce attorney can provide the answers, along with support and guidance, through this difficult time to ensure all relevant issues are addressed.

Source: cheatsheet.com, "Getting Divorced? How Divorce Affects Your Taxes", Sheiresa Ngo, Sept. 3, 2016

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