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Addressing post-divorce issues and tax implications


The decision to get a divorce is not an easy one to make for Rhode Island couples. Often times, this process if difficult to initiate, work through and finalize. The issues and disputes often presented in dissolution can also lead to post-divorce issues. One common factor to consider in a divorce and in a former spouses post-divorce life is tax implications immediately following their split and the years following it.

With regards to tax implications following dissolution, there are eight different areas that divorcing or divorced individuals should consider, reducing or avoiding tax burdens following the finalizations of their divorce agreement.

First, filing status should be determined. Legally, if a couple is still together at the end of the year, they could file jointly the following tax season even if the have since completed their divorce. If children are involved in a divorce, parents need to determine who will claim the kids and whether they will alternate this each year. In addition, child support and medical expenses regarding the children are also important issues to address.

If a spouse is awarded alimony, there can be tax implications unless it is detailed otherwise in the signed divorce agreement. It is often the case that the former spouse receiving spousal support will have to pay taxes on this form of income and the payer of alimony can use this as a tax deduction.

Lastly, divorcing or divorced spouses should consider their 401(k) investments, capital gains on a home and mortgage interests. Depending on the decisions they make regarding these areas, a former spouse could face penalties, taxable income or tax deductions. The resulting tax implications are highly dependent on the details of their divorce agreement and how each former spouse files their taxes.

The divorce process can involve many decisions, disputes and challenges. If a spouse is filing for divorce, during the process or recently finalized their dissolution, they should be aware of the possible tax implications they could encounter and ways to address them and any other post-divorce issues.

Source: Forbes, "Getting Divorced? 8 Things You Must Know About Taxes," Emma Johnson, Jan. 19, 2015

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