Fairfax Divorce Lawyer

Understanding the Tax Consequences of Divorce Decisions

For all but the most affluent families, divorce means financial strain. After all, you're dividing a single household into two households, each with separate expenses but without any corresponding increase in income.

A solid understanding of the tax consequences of your divorce settlement, however, can relieve some of this financial strain and even improve your bargaining position. To make sure that the tax aspects of your divorce are identified and fully considered, contact a knowledgeable lawyer at MacDowell & Associates in Fairfax.

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A common example of the ways tax considerations can affect your divorce settlement strategy is the fact that child support payments are not deductible to the payer, but alimony payments are. Alimony is also taxable income to the recipient. With this in mind, it makes sense to consider the tax consequences of a given payment.

If a high earner is willing to pay higher alimony in exchange for a somewhat lower child support obligation, the collecting spouse in a lower tax bracket might find it desirable to compromise a higher child support demand. Also, an assignment of the tax deduction for a child to the paying parent may be a strategy to employ in order to garner a higher child support payment. This is just one example of what might assist you in reaching a global settlement to achieve your objectives.

Our ability to show you how the tax consequences of particular bargaining positions can effectively protect the value of the marital estate and enhance the ability of a paying spouse to meet child and spousal support payments. It can also increase the practical ability of a receiving spouse to accept a somewhat lesser payment.

The timing of certain payments or transfers can also affect each spouse's tax liabilities with respect to liquidated home equity, family business assets, or certain securities received as part of a divorcing spouse's income.

For further information about the ways that tax attributes can expand or restrict your options in the negotiation of property division and support issues in a Virginia divorce, contact an attorney at MacDowell & Associates in Fairfax.