Category Archives for "Taxes"

Dealing with taxes after divorce

Residents of North Carolina who have gone through a divorce may need to adjust their approaches to filing their taxes. Most importantly, a divorced party will file as single, which means that records must be kept separately for use in the process of preparing a tax return. Additionally, it is important to be sure that one’s Social Security number is not being used by an ex-spouse for their return.

A divorce settlement that involves alimony or child support could carry tax implications for either party. For example, the individual paying alimony is able to deduct those amounts, and the recipient will need to report these funds as income. Child support, on the other hand, is not deductible to the paying party and is not income for the recipient. An individual who owes support but falls behind on payments could face problems with collecting an income tax refund as these funds could be intercepted to satisfy outstanding obligations. Legal fees related to divorce are typically not deductible, but legal fees paid to get help in handling divorce-related tax matters could be.

Additional issues that could arise during divorce proceedings include the ability to claim a child on a tax return. In some cases, parents’ returns won’t be helped by claiming a child, which may allow the other party to make the claim instead. If both parents could benefit, however, then a divorce settlement might provide for a rotating schedule allowing parents to take turns in claiming a child.

During divorce proceedings, a parent might be focused strictly on the imminent issues of finances and custody. However, a lawyer may address matters such as rights and responsibilities related to income taxes and other situations to ensure that these factors are considered during settlement negotiations.