The cost of a divorce is known to prevent some people from actually going through with the process. While not every divorce is cost prohibitive, some can become quite expensive. Divorce legal issues can find Houston spouses at odds and struggling to find common ground, extending the amount of time—and money—involved in coming to a mutually agreeable settlement. No matter the cost of a divorce, there is typically some financial impact.
People who have experienced a divorce have most likely learned that the bulk of the expenses are simply paid out and not able to be deducted on federal tax returns. While this is the case for most costs associated with property division and other portion of a divorce agreement, there are some very unique situations in which fees can be deducted on federal tax returns.
One of the primary tax-deductible costs relates to any expense incurred when obtaining alimony. Because the spouse who receives alimony pays taxes on it as income, he or she is able to deduct the money paid in an effort to actually receive it from a federal return. One caveat, however, stipulates that in order to be deducted, the total amount paid must be more than two percent of the taxpayer’s adjusted gross income for that tax year. Costs incurred when seeking child support are not able to be deducted.
Other costs that relate to tax matters may be deductible as well depending on the nature of the expense. This is just one of the many nuances involved in a divorce. Working with an experienced lawyer may be able to help people identify these costs and save some needed money.
Source: Huffington Post, “What’s Deductible for Legal Fees When Couples Divorce,” Julian Block, February 3, 2014