Despite the reported low rate of divorce in Colorado, the reality is that a big number of couples are battling with divorce. If you are considering divorce, it is recommended to consult with an attorney experienced in issues concerning child support in Fort Collins, CO. The professional can offer legal counsel regarding the tax implications in divorce, child support, and spousal support. Remember, you should hire a lawyer who perfectly understands family law and tax issues. Sometimes, it is necessary to consult with a tax attorney as well.
As much as divorce is such a bad experience for anyone who has ever faced it, there are tax implications tied to it. For instance, alimony (also known as maintenance) is tax deductible for the spouse paying and should be treated as a taxable income to the spouse receiving it. On the other hand, child support is not tax deductible. That means that the party making the child support payments won’t receive a tax break. The party receiving the child support payments won’t incur tax expenses too.
According to the Colorado State law, dependency exemptions for minor kids should be allocated between the spouses based on their respective incomes. When one spouse is earning $60,000 a year, and the other is earning about $40,000 annually, then, the dependency exemptions may be allocated 60 percent to the parent earning $60,000 and 40 percent to the parent getting $40,000 per year. Note that if the parent making child support payments isn’t current by the end of the year, they will not be eligible to claim the dependency exemptions in accordance with the Colorado State law.
Note that the head of a household status may be available to parents even when not married and pay for over 50 percent of keeping up the home. Generally, filing as the head of a specific household might allow for a better deduction than the standard one, and this could end up saving you money.
Besides, tax deductions may be available for people battling with divorce. Keep in mind that the lawyers’ fees associated with a divorce case are no tax deductible, various costs might be eligible. These costs include fees paid for appraisals, tax advice, accountants in connection with alimony or spousal maintenance, actuaries, and more.
401K penalty-free withdrawal may also be available if you’re required by the state court order to make child support or spousal maintenance payments to your dependent kid or former spouse.
During a divorce, the emotional pain and the fear of losing property, making child support payments or huge alimony, and other issues associated with divorce may be overwhelming. You need someone who understands the entire divorce process and can help you take the right steps to protect your assets and best interests. Note that attorneys understand these issues better than you do, a reason you shouldn’t work alone.