Nevada Divorce & Taxes: 5 Issues to Consider
Divorce can be as taxing on your emotional health as it may be on your finances. But it does not have to be, especially if you understand the tax issues that can arise in divorce.
When it comes to divorce and taxes, here are some of the most important things to be aware of:
- Federal income taxes – Whether you were married on the last day of the tax year will impact whether you can file a joint tax return, which tends to offer more financial benefits for people than filing singly. So, if you were still married as of December 31st of the year, filing jointly is generally still an option. If not, you can file singly or as a head of household (with the head of household designation being an option in specific cases, such as when someone has not lived with an ex for at least the past six months).
- Division of property – Tax issues can arise in the division of property in divorce when there may be capital gains and losses to report (in relation to the marital home) and/or when the marital home may be sold as part of the divorce. Similarly, gift tax issues may also come into play, depending on how the marital property is divided.
- Tax exemptions for children – In general, the custodial parent of children will be entitled to the tax exemption for children. This exemption can, however, be transferred to the noncustodial parent if or when needed.
- Spousal support payments – Typically, alimony payments will be tax deductible for the individual making the payments, and they will taxable income for the person receiving the payments.
- Child support payments – In contrast to alimony payments, child support payments are not necessarily tax deductible or taxable to the payer or the payee (respectively). If, however, the payer falls behind on the support payments, his or her future tax refunds can be garnished or seized by order of the court.
Need more information about the potential tax implications of your divorce case? If so…