Tax changes that affect a divorce
Florida couples who end their marriages will face several tax issues. One of the main changes is that they will need to start filing separately instead of having a choice of married filing separately or jointly. This is the case if the divorce was finalized by the last day of the tax year in question.
During property division, there may be issues of taxes on assets. Some of these issues may be settled during the divorce. However, in some cases, a person might choose to keep an asset and sell it later. This could lead to a capital gains tax. If one person pays alimony to the other, that person can deduct the alimony. The recipient of the alimony pays taxes on it. .
Usually, the custodial parent is the one who takes the dependent tax credit. However, the custodial parent can sign a waiver that allows the noncustodial parent to take this credit. The American opportunity education credit and the child credit can be claimed by the same parent who claims the dependent credit. The parent who has paid the child’s medical bills can claim those payments as a deduction.
People who are considering a divorce might want to talk to an attorney about possible tax changes and the financial implications. For example, there may be tax penalties for people who split some kinds of retirement accounts, such as 401(k)s. However, a qualified domestic relations order will protect the funds from taxes and penalties if the account is divided. The situation will change for people who get divorced in 2019 and later who will pay or receive alimony. The payer will no longer be able to deduct it, and the recipient won’t have to include it.