Spouses in Mobile, Alabama, who have spent decades married often have also spent decades accumulating valuable assets. However, not every marriage is meant to last, and divorce is a common reality. There are many complex issues divorcing couples face, issues that are made more complicated when one takes the tax consequences of a divorce into account. The following are some tax issues couples divorcing in 2020 will want to learn more about.
Child support and taxes
The parent paying child support cannot deduct these payments, and the parent receiving child support does not have to report it as income. Child support is considered a personal expense, and thus is tax-neutral.
Spousal support and taxes
In 2019, the laws regarding spousal support and taxes changed dramatically for those who completed their divorce after December 31, 2018. Under current law, the spouse paying spousal support cannot deduct these payments, and the spouse does not have to report the payments as income if they’re provided for in the divorce decree.
Dependents and taxes
When parents divorce, only one parent may claim the child as a dependent. Child custody can be a factor, since if parents cannot agree on who deserves to claim the child as a dependent, the Internal Revenue Service rules that the parent who can claim the child as a dependent is the parent with who the child has resided with for more than 50% of the year. Claiming a child as a dependent is also important, as it is necessary if a parent wants to file as head of household.
Many people in the Mobile area seeking a divorce may not know all the nuances involved in the dissolution process and the consequences of the decisions made therein. Thus, it is important to work with an attorney that practices family law. Attorneys stand up for their client’s rights, while still being honest about the outcome of a decision being made. Going through a divorce is an emotional process, so having an advocate on your side can allow you to focus on moving forward with your life, knowing that the legal aspects of your divorce are being taken care of.