Tax Aspects of Divorce

The different areas involved in divorce may impact your taxes. Some of the basic aspects are as follows.

1. Alimony – Alimony is deductible by the payor and is taxable income to the recipient.

2. Child Support – Child support is neither deductible by the payor or taxable income to the recipient.

Who claims the child as a dependent?

The custodial parent gets to claim the child as thier dependent unless the parents agree otherwise or the court orders otherwise.

3. Equitable Division of Property

a. Cash or cash equivalents – no tax consequence.
b. All other Property – there is no tax consequence until the recipient spouse sells the property at which time they are required to pay a capital gains tax.

4. Attorney’s Fees

Only that portion of the attorney’s fees which can be allocated to tax advice or incurred in obtaining alimony are deductible.

If no alimony is gained, then the fees are not deductible.