Family Law Overview

Divorce and Taxes

Divorce Tax Law Attorney - Serving Youngstown and Warren, Ohio

The Biviano Law Firm provides effective legal guidance for professionals, business owners, salaried and self-employed clients regarding income tax implications and divorce. We understand the financial effects of divorce. Our attorney serves clients in divorces with tax issues affecting their settlement.

Tax Consequences of Divorce

When the court awards spousal support (also called "alimony"), the spousal support generally must be included as taxable income to the party who receives it and it usually is tax deductible by the party who pays it. People who pay and receive spousal support are frequently in a relatively high tax bracket. For this reason, the tax consequences of a spousal support award should always be taken into consideration when negotiating a spousal support case or presenting the case to the court.

Another important tax factor to be considered in a divorce with minor children is the allocation of the tax dependency exemption and the child tax credit. The exemption and the credit can be worth two thousand dollars per year or more, depending on the number of children involved. As a general rule, the residential parent could be entitled to claim the minor children as a tax dependency exemption and claim the tax credit. However, there are exceptions to this practice and the court can, under certain circumstances, award the non-residential parent the right to claim the exemption and the credit or provide other offsetting financial relief.

Allocation of the tax dependency exemption may be modified by the court upon the filing of a motion by either party. If it can be shown that it would be in the best interest of the child for the non-residential parent to claim the child as a tax dependency exemption, the court can award the exemption to the non-residential parent. Where there is more than one child of the marriage and one of the parties has a small amount of income, the tax dependency exemption and child tax credit could be wasted if that party claims all of the children. At certain income levels, claiming more than one child may not increase the tax refund of the lesser earning parent, whereas the party with greater income could save thousands of dollars each year if the tax dependency exemptions are properly allocated. For this reason, allocation of the tax dependency exemptions is a very important part of every divorce with minor children.

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Do you have questions about the tax consequences of divorce or dissolution of marriage? For effective legal counsel regarding divorce tax law, contact our Ohio divorce attorney.

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Biviano Law Firm
700 Huntington Bank Tower
108 Main Avenue S.W.
Warren, OH 44481

Phone: 330-392-5000
Fax: 330-393-0008
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