How could my divorce affect my taxes?
As you move forward with divorce proceedings in the state of Utah, you are likely encountering a number of new and complex legal guidelines. When approaching all of the many different aspects of divorce, it is important to keep in mind that such arrangements can have a significant impact on your tax returns. Provided below are a few important divorce-related factors to keep in mind when filing your taxes this year.
The American Institute of Certified Public Accountants explains how legal separation and divorce should be accounted for when filing your tax returns and addresses issues that can arise over property division and other processes. Child support payments, for instance, are not considered by the IRS to be a taxable source of income and are therefore not required to be disclosed in your tax returns. You should account for any alimony that you provide or receive, however.
When it comes to property division, any transfer of real or personal property between you and your spouse is generally not considered to be taxable. The Davis rule, as it is known, applies to both marital and community property, and does not distinguish between assets accumulated before or during your marriage. However, factors like the existence of a prenuptial agreement can affect whether or not property is considered to be exempt from taxation.
These general tax rules apply in many cases. However, a number of other considerations can come into play in your own divorce and tax returns. The information provided here should not, therefore, be interpreted as legal advice.