Tax Implications in Divorce, Maintenance and Child Support
Our Fort Collins divorce attorneys can explain how Colorado law applies to the facts and circumstances of their case, including some of the tax issues they will face. If you require tax advice you should seek such from a tax attorney or whoever you reply upon for such as we only practice in family law and do not advise as to issues that require a legal opinion on any tax issue.
If you are going through a divorce you marriage status as of December 31st determines you and your spouse’s eligibility to either file jointly or married separate if you are still married. If your divorce is complete on December 31st or earlier than neither you nor your former spouse may file jointly (unless remarried).
Maintenance, more commonly known as alimony is tax deductible for the party paying and it is treated as taxable income to the party receiving maintenance.
Child support is not tax deductible, so the party paying child support will not receive a tax break and the one receiving the child support will not incur any taxes.
Dependency exemptions for minor children shall be allocated between the parents in relation to their income. When one parent earns $60K a year and the other earns $40K per year then the dependence exemptions should allocated 60% to the one earning %60K and 50% to the one earning %40K. In Colorado if the parent paying child support is not current at the end of the year they may not claim the dependency exemption.
Head of household status is available to parents who are not married and pay for more than 50% of keeping up the home. Filing as head of household may allow for a higher deduction than the standard one and thereby save you money.
Tax deductions are available for those going through a divorce. While attorney’s fees associated with your divorce are not tax deductible some of the costs may be eligible, such as: tax advice, fees paid for appraisals, actuaries and accountants in connection with maintenance / alimony.
401K penalty-free withdraw is available if you are required by a court order to pay maintenance or child support to your former spouse or dependent child.