What are the tax implications of a divorce?

When a couple divorces in Kansas, there are several tax implications to consider. First, the tax filing status of each party changes. Unlike when married, each taxpayer must file as either single or head of household. Single filers must take the standard deduction while head of household filers are allowed a higher deduction. Additionally, the former spouses must decide who will claim any dependents that were part of the family. The custodial parent is usually allowed to claim the deductions, but the IRS will not accept multiple taxpayers claiming the same dependents in the same year. The payment of spousal support (alimony) is also taxable, as it is counted as income to the recipient spouse. On the other hand, child support payments are not taxable. Finally, special rules apply if any of the spouses elects to transfer or sell any assets during the divorce. If those assets are sold at a gain, the couple may be required to pay capital gains taxes. The sale of a home, for example, could potentially result in a sizeable capital gains bill. Overall, it is important to discuss the tax implications of any divorce agreement with a qualified tax attorney or accountant. Both parties can benefit from expert advice to ensure that their divorce is structured in a way that minimizes the tax burden.

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What are the tax implications of a divorce?

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