Navigating through a divorce is difficult. Dealing with taxes is difficult. Combine these two and you get one awful pairing. Unfortunately, those who are going through a divorce need to be aware of the fact that the Internal Revenue Service (IRS) will likely be involved.
Why would the IRS be involved in my divorce?
To put it simply, whenever money is involved the IRS is involved. Two of the most common issues involving the IRS during your divorce include:
- Child support. If children are present in the marriage, it is likely that one party will be required to make some child support payments. It is important that the person making the payments know that these payments are not deductible. Take this into consideration when negotiating the agreed upon amount.
- Alimony. A party that receives alimony payments is essentially viewed as receiving additional income. As a result, the IRS considers these payments taxable. In contrast, the party making the payments can generally consider these payments deductible.
These are just two of the more common issues that arise during the divorce that will be impacted by taxes. Another one to be aware of involves estate planning. If you make contributions to an IRA for your spouse, it is important to note that you cannot deduct the contributions made to the former spouse’s IRA for the year the divorce is finalized.
Surprised the IRS is involved? That’s just the start.
These issues highlight the complex nature of divorce. As such, those who are contemplating or recently decided to go through a divorce are wise to seek the counsel of an experienced family law attorney. This legal professional will guide you through the process, working to better ensure a more favorable outcome and reduce the risk of any surprises in the future.