Finances and saving money are often on the mind of divorcing couples in New Mexico and elsewhere in the country. It is not only the costs associated with the process and the property division phase that concern spouses, but also their post-divorce financial life. Not only will a spouse consider or request spousal support but will also question how taxes could impact the decisions they make during their dissolution.

When a divorce includes alimony and other stipulations, it is important to note the tax concerns that can come up in their post-divorce life. The first thing the newly divorce couple needs to consider is their filing status the first time they file taxes after their split. Legally, some newly divorced couples can file jointly if they were still considered married at the end of the previous year. But if they have reached an agreement for one spouse to claim any children as dependents, they can file as a single head of household.

In addition to considering who claims the children when and any child support payments, if alimony is awarded, it is important that both spouses consider this financial support seriously when they file for taxes. If a former spouse is receiving alimony they will need to pay taxes on that form of income. The payer of alimony is able to use spousal support payments as a tax deduction. Moreover, ex-spouses should be aware that this tax implication is only applicable if they are not detailed in the signed divorce agreement.

Understanding tax implications is an important factor to consider when working through the divorce process in order to ensure no surprises post-divorce. Those unsure how to deal with spousal support issues or are currently dealing with post-divorce disputes or problems regarding alimony should understand their rights and options so they can take timely and appropriate action.

Source: Forbes, “Getting Divorced? 8 Things You Must Know about Taxes,” Emma Johnson, Jan. 19, 2015