tax

Tax consequences of divorce: Alimony recipients & tax withholding

If you are awarded alimony as part of a divorce settlement or divorce final judgment, typically these monies are not subject to tax withholding. Therefore, there may be a resulting tax liability, which should be looked at by a tax advisor so you are fully aware and prepared to pay the liability. 

Also, due to your status changing from married to single, a tax advisor can adequately inform you of the benefits/or loss of benefits that occurs due to the change in filing status from married to individual or single.

A tax professional can assist you with filling out a new W-4, if necessary. This form instructs your employer to withhold federal income tax from your pay, which may differ post-divorce due to the new status of becoming single.

This blog post is not intended to provide readers with legal advice or tax advice in any way. This does not create a legal relationship or agreement between the reader and Bouchard Law, P.A. Bouchard Law, P.A. and its attorneys and staff do not claim to be experts in tax matters.  Bouchard Law, P.A. recommends consulting a tax professional to fully evaluate your tax implications and consequences of your particular position.

Tax consequences of divorce: Dependency exemption

In Florida, the parent that has the child the majority of the time typically receives the tax exemption from the IRS. However, within marital settlement agreements, the parties may negotiate for the parent with a lesser amount of overnights to alternate the exemption or have this exemption every year. For example, if the parent with the majority of the time does not need to file taxes, that parent may utilize this dependency exemption as a bargaining chip (worth approximately $4,050.00 in 2017 as a deduction).

The IRS requires in these types of scenarios for the parents to file a Form 8332 in order to allow the "noncustodial" or parent will lesser amounts of time-sharing to take the exemption.

Another consideration is the actual value of the exemption. Currently, for every $2,500.00 above $287,650.00 in gross income, the value of the exemption is reduced by 2 percent, up to $410,150.00 total gross income. After that gross income point, the exemption can no longer be taken.

This blog post is not intended to provide readers with legal advice or tax advice in any way. This does not create a legal relationship or agreement between the reader and Bouchard Law, P.A. Bouchard Law, P.A. and its attorneys and staff do not claim to be experts in tax matters.  Bouchard Law, P.A. recommends consulting a tax professional to fully evaluate your tax implications and consequences of your particular position.