5 Simple Tax Tips About Divorce

Hi There,

Happy New Year!  Tax season for 2009 has now begun. Here are 5 simple tax tips about divorce:

1.  Child support is not taxable to the recipient, or to put it more bluntly, she who pays her ex child support also pays the taxes on it.

2.  Alimony is taxable to the recipient, so he who pays childsupport as alimonyor as unallocated support, is saving the taxes; or alternatively, transferring responsibility for them to his ex.

3.  Unless you are in a single-sex marriage, all property transfers between you and your ex as part of your divorceare tax free.  I wrote about this previously here.

4.  If you and your soon-to-be-ex are dividing pensions on divorce (again only if you were not in a single-sex marriage), then there is a way to transfer pensions without any tax consequences.  It is called a qualified domestic relations order orQDRO, and there is a whole niche of the bar who do nothing else.

5. Finally, the IRS has five tips for recently married or divorced taxpayers.

 

Best,

Nancy