Many people who go through a divorce will tell you they were surprised that, despite all the intense emotions that come with the end of a marriage, the process of dissolving the marriage is largely about money. And the monetary aspects carry over during tax time. There are a lot of ways federal and Massachusetts tax laws may play in to the outcome of a person's divorce. Alimony remains tax deductible to the person paying it, at least for the time being. Another issue is which parent will get to claim the exemptions that go along with having a dependent child, as these can be worth thousands of dollars in tax savings.
The property division process also comes with the potential for tax consequences. For instance, special steps need to be taken when one spouse is going to collect from another spouse's retirement fund. This often will involve the preparation and issuance of a special court order called a Qualified Domestic Relations Order.
In high asset divorces, another issue related to taxes may involve the capital gains or capital losses of the couple's investments, as the extent of an investment's growth or shrinkage can have important tax consequences. In this respect, before agreeing to accept a particular investment, a spouse should carefully evaluate what he or she might expect in terms of tax consequences.
While it is true that a person who wants to better understand the tax consequences of an impending divorce will also want to consult with an accountant, it is important for a person in this sort of situation to speak with a legal advisor to make sure that they understand their legal options and the possible outcomes of these options.