Tax Implications Related to a Divorce

Obtaining a divorce invariably involves tax implications to both the husband and wife. Most obviously and rather significantly in terms of tax consequences, both the husband and wife will no longer be entitled to the "married filing jointly" status for the tax year in which the divorce was finalized. 

"Head of Household" Status

A taxpayer who remains married but is separated from his/her spouse for at least 6 months and whose household is home for a dependant child is eligible for head of household status.

How is Alimony Taxed

In general, if you are paying alimony then you can deduct it from your income.  Often this is a benefit to both parties because the person paying alimony generally is in a higher tax bracket then the person receiving it.  Divorce lawyers will often explain this advantage when they try and justify that you can afford to pay more alimony.  This rule allows you to shift the tax burden from the high tax bracket person to the lower bracket person. 

Note:  Even though by default alimony is deductible to the person paying it and taxable to the person receiving it, you can change who is taxed by agreement of the parties in your marital settlement agreement.

How are Child Support Payments Taxed

Child support payments are not tax deductible.  You should consult with an attorney to determine what your child support obligation will be.

A caveat: Any unusual situation may well justify a consultation with a tax professional in order to fully comply and to receive the full benefits of the Tax Code.