Many Florida divorcees may forget to consider the tax consequences of their divorces. There are many things that recent divorcees may not consider when filing their taxes, such as alimony. The divorced couple should discuss who will be claiming the children on their taxes because this can make a significant difference in overall tax liability. Many divorcees may also want to consult a professional tax service to make sure that they are doing their taxes properly, particularly in the first year after their divorce.
Some divorcees may not realize that their alimony is taxable income; this means that a divorcee who wishes to be prepared for his or her end-of-year tax bill will want to put aside 20 percent of his or her alimony payments so as to not be caught unprepared. This can be held in a separate account so that it is not used for family expenses or emergencies. Those with high incomes may want to consider setting up quarterly installments to the IRS instead of having to pay it at the end of the year.
Those who cannot pay their yearly tax bill after their divorce can consider setting up a payment plan with the IRS. The agency is usually willing to create an installment plan, but this will still mean that the borrower will have to pay interest and penalties on the amount due.
Due to the fact that alimony is treated as taxable income, it may have widespread ramifications for divorcees on their tax returns. Divorce attorneys may help recent divorcees by explaining the potential tax consequences of their alimony and how it will affect them otherwise.
Source: Huffington Post, "Divorce Is Taxing in More Ways Than One", Amy Koko, June 07, 2013