After Your Divorce – Important Considerations

After your Washington State divorce is final, there are many legal issues that may arise.

Of initial concern is making sure the divorce decree is fully implemented and all post-divorce issues are addressed.  See our Post Dissolution Checklist.

Develop a Post-Divorce Financial Plan

One fact of divorce is that two households cost more to maintain than one but income remains the same. Many people fail to realize their settlement may need to pay for necessities for a substantial amount of time.  It is important before, during, and after the divorce to prepare a workable budget and do so financial planning. See Divorce Budget Worksheet.

Post Judgment/Post Divorce Litigation

As former spouses and children adjust to their new lives after divorce, and circumstances change, the prior court orders may need to be changed.  Among the most common post-divorce legal actions are modifications (see modifications, contempt actions, and other enforcement actions. See Post Judgment/Post Divorce Litigation.

Tax Issues after a Washington State Divorce

Questions concerning your taxes are sure to arise during and after divorce.

1.  Do I pay capital gains tax on property transferred to me?

No. No capital gain or loss is recognized on transfer of property between spouses as part of the divorce.

2.  What is my tax filing status? Single? Head of Household?

If you are divorced as of December 31 of the prior year and do not qualify for another filing status (such as Head of Household), you must file as Single.

Filing as Head of Household is generally advantageous.  To qualify for Head of Household status, you must meet three requirements: 1) you are unmarried or “considered unmarried” on the last day of the year (i.e., your spouse has lived apart for the last six months of the year); 2) you have paid more than half the cost of keeping up your home as of the last day of the tax year; and 3) a dependent child or other relative lived with you for more than half the year (or you have a dependent parent).

3.   Is the child support or spousal support tax deductible?

Spousal support is deductible to the paying spouse and  taxable income to the recipient spouse. Child support is neither tax deductible nor tax includable. It comes out of post-tax dollars.

4.   Who gets the dependency exemptions for the children? 

Without a child support order in effect, the federal tax code generally allows the custodial parent to claim the dependency exemption for all children. However, the parents can, and often do, choose to share or transfer the dependency exemptions in the child support order.  Doing so can produce a fairer result since both spouses are able to save on their taxes.   If dependency exemptions are shared,  the custodial parent must sign a copy of Form 8332 for the noncustodial parent to attach to their tax return.

5.  Where do I get additional tax information?

Before you start preparing your income tax forms, visit the IRS web site to access Publication 504 – Tax Information for Divorced and Separated Individuals booklet.