The Tax Repercussions of Divorce
While taxes may be the last thing on a divorcing couple’s mind, the reality is that ending a marriage does come with significant and far-reaching tax-related repercussions. Alimony and a name or filing status change, for instance, are only a few things that divorcing parties should be sure to consider. Read on to learn more about some of the tax consequences of divorce in Florida.
Those who receive alimony from a former spouse should remember that those amounts are not taxable as income, nor are they deductible.
Child support payments are not tax deductible, so a parent who makes monthly payments can’t claim a deduction come tax time. Furthermore, child support recipients will not be taxed on those amounts. There are, however, other childcare-related deductions and credits for which a parent could qualify.
Those who legally change their names after divorce will need to notify the Social Security Administration of the modification. To do so, taxpayers will need to file Form SS-5 and request a new Social Security Card. The name on this card must match a person’s tax return to avoid the delay of a refund. Unfortunately, applying for a new card online is not possible. There is, however, no charge for obtaining a new card.
It is not uncommon for one half of a recently divorced couple to lose his or her health insurance. In these cases, a taxpayer will be allowed to enroll in coverage through the Health Insurance Marketplace during a Special Enrollment Period as divorce falls under the category of a qualifying life event. Those who purchase coverage through the marketplace could also qualify for advance payments of the premium tax credit. Those who do so, however, will need to report the modification in circumstances if they involve a change in marital status, a name change, a change of address, or a change in income.
Couples who divorce in Florida are required to divide their marital assets in an equitable manner. It’s important to keep in mind when negotiating these agreements, that some types of property come with their own tax implications. For instance, if one spouse received the family home in the settlement and then later sold it, then he or she can expect to pay capital gains tax on the difference. In this way, a property settlement that can seem fair from the outset, could end up being inequitable once taxes are taken into consideration.
Contact the Dedicated Clearwater Divorce Attorneys at Cairns Law
If you are planning on filing for divorce, there could be important tax-related repercussions to your decision. At Cairns Law, our experienced Clearwater divorce lawyers can help walk you through the ins and outs of these tax consequences. To learn more about the tax repercussions of divorce, please call 727-683-1472 and set up a free consultation with a member of our dedicated legal team today. You can also reach out to us via online message.