When Arizona couples think about ending their marriage at this time of year, it is usually the holidays that are the primary focus. However, there is good reason to spend some time thinking about springtime, particularly tax season. Divorce will have a number of different effects on tax obligations, and planning ahead can make those changes easier to manage.
One way that tax matters will shift following a divorce involves alimony. The party who is expected to make alimony payments will have the right to claim those payments as tax deductions. On the other side, the party who receives spousal support is expected to pay taxes on those payments, the same as any other form of income.
When it comes to child support, there is no similar provision. Child support is not tax deductible because it is expected that both parents will contribute to the financial needs of their shared children. Child support is also not taxable on the receiving end. For some couples, negotiating larger alimony payments and lower child support expectations can help even out the tax burden. For others the opposite approach is more advantageous.
No one enjoys the process of getting a divorce, just as no one enjoys paying taxes. However, with the right degree of planning, changes in an Arizona spouse's tax obligations can be easier to adjust to. Knowing what to expect is half the battle, which is why this is an issue that should be taken into consideration early in the divorce process.
Source: cheatsheet.com, "Getting Divorced? How Divorce Affects Your Taxes", Sheiresa Ngo, Sept. 20, 2016