Going through a divorce is not an enjoyable experience to say the least. It is one of the most stressful things that two people will ever have to go through in their lives. When a couple decides that it is time to go their separate ways, they have a lot to think about, a lot of decisions to make. They have to think about their kids and where they will go, what to do about their house, their pets, other assets and so on. One other thing that has to be taken into account is the tax implications that come into play when you are talking about a divorce.
Taking care of things on the tax side is pivotal:
Settling on Property
One of the tax implications that goes along with a divorce is that of figuring out what to do with property from a tax perspective. It is far more difficult to figure out tax implications relating to property than it is dividing up the property in the first place. Certain assets, such as a home with a mortgage, are going to have tax liabilities or benefits, while others may have no tax implications at all.
Child support payments are not deductible on your personal income tax return, no matter what other people may actually tell you. So when you are paying child support, do not do so thinking that you are going to be able to get a deduction as a result of it. This can cause issues with the IRS when you try and use these things to take away from your taxable income.
When you have children you have the ability to get tax benefits and exemptions. A child can get you an exemption of thousands of dollars and figuring out who is going to be able to claim the children and the exemption or exemptions is very important. Generally whoever has custody of the children is going to be able to include them on their tax return.
Alimony payments, contrary to child support payments, are something that is tax deductible. If you are the person that is paying out the alimony payments, you get to deduct these to reduce your taxable income.
Tax implications relating to a marriage are important to pay attention to. There are just so many different areas where taxes can come into play. When you are talking about property, alimony, child support, understanding how to file your return and what you can deduct and not deduct is pivotal to accurately settling with the Internal Revenue Service.