What are the tax implications for a military divorce?

In North Carolina, there can be tax implications during a military divorce. Generally, if you are an active duty military service member or a civilian spouse of an active duty military service member, you may qualify for special tax considerations including the exclusion of certain military pay from state income tax. When it comes to dividing property, any money that is awarded in the form of military retirement pay is taxed. For example, if a civilian spouse of an active duty service member is awarded 50 percent of the military retirement pay in the divorce, that money will be taxed. However, the service member may be able to claim an exemption on their Federal taxes if 50 percent of the retirement pay was not utilized as property or alimony. In addition, any Uniformed Services Former Spouses Protection Act (USFSPA) or other military retirement pay that is awarded to the civilian spouse is taxed as ordinary income on their taxes. It is important to note that USFSPA awards are not eligible for the military exclusion when filing state taxes. Finally, in the case of a civilian spouse of an active duty service member, they may be eligible for the Survivor Benefit Plan (SBP). The SBP is a program that pays a portion of military retirement pay to a surviving spouse after the service member’s death. Any payments received through the SBP are taxable.

Related FAQs

Are there any limitations on the division of assets in a military divorce?
What if my spouse does not show up for a military divorce hearing?
Can I get a default judgment in a military divorce?
Can I file for divorce without a lawyer?
Does the Servicemembers Civil Relief Act apply to a military divorce?
How do I determine the terms of a military divorce settlement?
Are there any differences between a military divorce and a civilian divorce in another country?
Can I negotiate a settlement directly with my spouse for a military divorce?
Are there any special considerations for filing for a military divorce as a civilian?
How do I divide military retirement benefits in a divorce?

What are the tax implications for a military divorce?

Related FAQs

Related Blog Posts