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The relationship between divorce and taxes

In the midst of the emotional and difficult process of ending a marriage, it can be difficult for a Kentucky reader to think about the long-term implications of certain financial decisions. It is easy to become wrapped up in feelings of anger and sadness, but these emotions can lead one to make decisions that are not actually beneficial for the future. When navigating divorce, practicality and future prosperity should be the driving forces behind major decisions, not emotion.

Divorce will certainly have a significant financial impact, but it is also very important to consider how divorce-related payments and receipts could impact taxes. For example, an individual who will pay spousal support can deduct that amount. However, for the person who is receiving these payments, that amount is considered taxable income. Additionally, a divorce will change a person's filing status in the year that a divorce decree was received or legal separation was obtained. 

Child support will have a minimal impact on taxes as it is neither deductible or taxable. Property division settlements generally do not have a major impact on taxes, but there are exceptions to this. For example, retaining significant stock options or valuable real estate in a divorce could have financial consequences during tax time. 

Failure to properly understand how a divorce could impact taxes could have negative and surprising implications in the future. A person walking through a divorce would be wise to seek a full understanding of the options available by working closely with an experienced Kentucky family law attorney. With patience and guidance, it is possible to lay the foundation for a financially strong post-divorce future.

Source: willitsnews.com, "Taxes and Finance: The taxing side of divorce", James Angell, Nov. 8, 2016

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