Time and circumstances seem to change on a daily basis. Once upon a time, the majority of marriages lasted a lifetime. Today, however, the chances of a lasting marriage are less than 50%. Because of that, the changes in taxes are important to note.

As we all know, divorce isn’t pretty. Parents fight, children rebel, and the long process of divorce takes its toll on everyone involved, not to mention the cost. Just because your divorce is final doesn’t mean you still don’t have issues. It’s now time to deal with taxes. When you understand how your taxes change, it makes the divorce process a little easier.

Alimony can be an issue in divorce. Alimony is payments made by one party to the other to maintain the lifestyle they have become accustomed to. Every state regards alimony differently, but the premise is the same. The IRS has strict rules regarding alimony that all taxpayers need to know.

The IRS does tax alimony payments that are received. The payer gets the better deal. They get a deduction on alimony payments they pay. It only applies, however, when alimony payments are granted in the divorce decree. If there is nothing about alimony written in the decree, the payments are not taxed, nor are they deductible.

In the case of child support, the IRS would rather avoid the subject matter altogether. Therefore, child support is neither taxable nor deductible.  However, if you don’t pay your child support as required by the court, they will take it from any refunds you may be entitled to. That is the only involvement the IRS has.

The IRS doesn’t care that you’re contemplating divorce, in the middle of divorce, or legally divorced, so it’s up to you, the taxpayer, to make sure you completely understand all of the tax issues.

Daniel Stoica Accounting Professional