I am getting a divorce. Now what about taxes?
The tax implications for someone filling or getting a divorce in Idaho should be discussed with an attorney before the divorce order is finalized. There are several things to consider, based on the specific circumstances, which can have harsh tax implications if they are not properly addressed in the divorce decree.
For example, the wording and conditions surrounding the award of alimony, or spousal support in Idaho, can have implications like if a paying spouse can claim the payment as a deduction. Further, the parties should discuss what would happen if the spouse that is receiving alimony should die, or become remarried.
Other issues, to discuss and decide on are the dependency, and earned income credit awards. This includes any waiver of the dependency exemption for Idaho and Federal returns by the primary custodian.
If two married people separate or divorce mid-year then the issue might arise as to who will claim head of household status for that year.
Finally, the offset of property and the payment of any equalization for the property offset can have major tax implications. Because it could be possible for one spouse to receive a "tax free" property settlement, while the other spouse has to pay taxes when an asset they received in the divorce is sold to pay the other spouse the settlement funds. This could result in an unequal distribution that at first appears to be equal.
These are just some of the more general and common tax implications to a divorce, and as always, in a divorce all tax issues should be discussed with both your attorney and your tax professional before any final decision is made.