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Resolving Tax Matters during Divorce Essential to Avoiding Problems after Divorce

By Nottage and Ward on March 21, 2012

Financial issues are common in many marriages and, in some, may even be severe enough to lead to divorce. But the financial problems may not stop there. Divorced couples often experience financial issues after divorce due to unforeseen tax implications which were not addressed in the terms of the divorce. This can not only result in ongoing animosity between the couple but also potentially cause serious tax issues. No one wants the Internal Revenue Service (IRS) breathing down their necks, so it is important to address the following tax matters in your divorce:

• • Deducting Legal Fees – Typically, you cannot deduct legal fees on your tax return; however, if the fees are related to the allocation or protection of income-producing assets, then the fees can be deductable. Before you file your tax return, know what you can deduct and what you can’t.
  • Filing Status and Exemptions – A very important issue to resolve during divorce settlement negotiations is who will be claiming the children, or who will claim which child. In addition, matters related to the “head-of-household” filing status and exemptions must also be resolved.

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