Tax filing status. Married couples usually file a joint tax return. It might be better to be divorced by the end of the year so you can file as a single person or head of household, depending on your status. Or, even if you are still married at the end of the year, you might be better off filing separately or, if you qualify, filing as head of household.
Children. Most of us are familiar with the Dependent Exemption, but there are many other credits available for your children that can reduce your tax bill, including the Earned Income Tax Credit, Child and Dependent Care Credit, Hope Scholarship Credit, Lifetime Learning Credit.
Spousal maintenance or alimony. If properly structured, it is deductible by the person paying and is taxable income to the person receiving. On the other hand, child support is neither taxable nor deductible.
Property settlement. Usually there are no immediate tax consequences to a divorcing couple’s property settlement agreement. However, there may be significant tax consequences down the line. Divorcing couples should consider the tax consequences that occur in the years ahead when they are determining the distribution of assets and debts so that there are no unexpected surprises.
A couple getting divorced can save substantial dollars by doing tax planning.......seek some tax advice and look at the total picture….it pays to plan together so both benefit.
Nancy Hudgins, a San Francisco mediator and lawyer, began specializing in civil litigation in the 1970's. She has represented both plaintiffs and defendants, chiefly in personal injury, medical malpractice, elder abuse and product liability lawsuits, but also in a wide variety of complex litigation, including civil rights, fraud and class actions. She has settled and mediated thousands of cases. In addition to civil litigation mediation, she also co-mediates divorces with John Duda, a marriage and family therapist.
Debra Synovec, a Seattle-based mediator and lawyer, has mediated divorces for 20 years. She believes in empowering the parties to reach their own resolution.