What are the tax implications of a divorce?

When a couple divorces in Washington, there are several potential tax implications to consider. Firstly, the spouses may choose to file “married filing jointly” or “married filing separately” on their federal tax returns. If they file “married filing separately,” they will not be able to claim the Earned Income Tax Credit, Child Tax Credit or adoption credit. Another option is to file as “head of household,” if one of the spouses is caring for a dependent. Secondly, the couple may need to consider what is known as “alimony” or “spousal support.” Alimony is a form of financial support, usually provided by the higher-earning spouse, to the lower-earning spouse. If the alimony payments are considered deductible to the paying spouse and taxable to the receiving spouse, then it could change the amount of taxes owed by both parties. Finally, certain assets may be subject to capital gains tax when they are divided in divorce proceedings. For example, if one spouse gives the other an asset that has appreciated in value since it was acquired, the recipient of the asset may owe taxes on any capital gains. In summary, a divorce in Washington can have major tax implications for both spouses. It is important for couples to understand their options and consult a tax professional to make sure they are compliant with all applicable laws and regulations.

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What are the tax implications of a divorce?

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