EFFECTIVE LEGAL GUIDANCE FOR DIVORCE-RELATED TAX CONSEQUENCES
CHILDREN’S EXEMPTIONS
Child support payments are not subject to tax write-offs or exemptions. And, after a divorce, only one parent can claim minor children as dependents on their taxes. The federal government provides a tax exemption for custodial parents, unless the non-custodial parent can prove they provide 50 percent of support. State court typically alternates the exemption, as long as one party is providing child support.
It is important to address and agree to exemption issues before they create additional problems. If the federal exemption is never addressed in your divorce agreement, the federal government provides it to the custodial parent.
TRANSFERRING ASSETS
In certain situations, you can transfer assets to your ex-spouse without triggering tax consequences. These situations may include transferring:
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401(k)s
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Homes
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Bank accounts
A Qualified Domestic Relations Order, QDRO, can also be beneficial. This order can allow you to assign a portion of an asset to your ex-spouse without triggering unintended tax consequences.
INCOME ISSUES
Unlike child support payments, spousal support payments, also called alimony, are subject to special tax treatment. The receiver of the support payments is subject to tax, because the payments are considered additional income. On the other hand, the party paying support usually receives a tax write-off.
Liquidating assets can create complicated tax consequences. Depending on the asset and other circumstances, the Internal Revenue Service (IRS) views liquidated assets as income. This is also true for foreclosures. If you do not file bankruptcy and your home goes through foreclosure, there could be tax implications. You could receive a 1099 form, which treats forgiven debt as income subject to taxation. It is important to consider the tax implications of debts and other obligations during your divorce proceedings.
FREE INITIAL CONSULTATION WITH AN ATTORNEY
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ATTORNEY MONIQUE B. LAMB
Since founding the practice on January 4, 1999, Monique has dedicated her career to family law, providing clients with compassionate yet practical guidance through some of life’s most challenging moments. With over two decades of experience, she understands the complexities and emotional toll of family law cases and focuses on achieving resolutions while minimizing unnecessary conflict. [ ATTORNEY BIO ]
"Attorney Boucher-Lamb is thorough, resourceful, and a highly knowledgeable attorney. I hired her many years ago and we have worked together for the past eight years. She is professional, reliable, personable, and an overall fantastic attorney. I highly recommend her; she is fair and gets the job done."
-DANIELLE
"I had a fantastic experience with a very difficult time in my life. The divorce was hard for me, but Monique was the consummate professional. Without her guidance and support, I don't know how I would have made it through."
-DAWN M.
"Monique is a fantastic lawyer. She expeditiously helped my husband and I pull together our estate papers. She was very helpful with any questions I had, and was extremely thorough."
-JESSICA S.
"Monique helped me through one of the worst times of my life. She was always looking out for my interests, she is very knowledgeable in her field, and she is completely genuine."
-ANONYMOUS
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