When love goes bad: Divorce and taxes

Being such a hopeless romantic, I recently posted on tax considerations for newlyweds.

But sadly, around half of all marriages in the United States end in divorce.

When that happens, on top of everything else involved, both of the soon-to-be ex-spouses need to take into consideration any potential tax implications of the split.

Take, for example, alimony. Ryan Ellis of the Tax Info Blog points out that this spousal support is taxable, even if it’s not deductible. And Ryan elaborates on alimony, as well as the IRS’ innocent/injured spouse rules, for a woman who’s dealing with a "jerk" of a husband. Guess there’s no hope for a reconciliation there.

Robert D. Flach, The Wandering Tax Pro, also recently concluded a comprehensive four-part series on divorce and taxes:  Part 1, Part 2, Part 3, and Part 4.

Let me just add a couple of words to these very worthwhile bloggings.

If you’re considering or are in the midst of a divorce, get an accountant and/or financial planner as well as an attorney. You need someone who can help you determine the value, current and long-term, of any settlement proposals.

And the tax costs are definitely an important factor in those equations.