What are the Tax Implications of Divorce in Tennessee?

Divorce is a complex and often emotionally charged process, but it also has significant implications for both parties’ financial situations. One crucial aspect that cannot be overlooked is the tax implications of divorce in Tennessee. When a couple decides to end their marriage, they must understand how their tax situation will be affected. This includes considerations such as filing status, claiming children as dependents, the division of property, and potential spousal support payments.

If you are facing the challenges of divorce in Tennessee, contact our divorce attorneys at Burch and Stewart Attorneys to ensure a fair and optimal outcome for your financial future.

Changes in Filing Status

One of the key tax implications of divorce in Tennessee is a change in filing status. Before a divorce, couples file taxes jointly, taking advantage of certain tax credits and deductions. After divorce, each spouse must file as either single or head of household. Determining the appropriate filing status can significantly impact the tax liabilities and refunds of both parties.

Claiming Children as Dependents

Another important consideration in the tax implications of divorce is determining who will claim the children as dependents. In Tennessee, the parent with primary custody of the children typically claims them as dependents on their tax return. However, there may be situations where it is beneficial for the noncustodial parent to claim the children.

Addressing this issue during divorce is important to avoid potential conflicts and maximize tax benefits. A skilled Tennessee divorce lawyer can help negotiate and draft an explicit agreement regarding claiming dependents.

Division of Property

The division of property during divorce can also have tax implications. In Tennessee, property acquired during the marriage is considered marital property and must be divided equitably between the spouses. However, transferring certain assets, such as retirement accounts or investment properties, may trigger taxable events. You should always work with a knowledgeable Tennessee divorce attorney who can ensure that the division of property is structured in a way that minimizes tax consequences for both parties.

Potential Spousal Support Payments

Spousal support, also known as alimony, may be awarded to one spouse during divorce. If the order was entered after 2019, these payments generally do not have tax implications for either the payer or the recipient. However, some payers or recipients do have to claim spousal support on their tax returns due to the date of their decree or other circumstances.

An experienced Tennessee divorce attorney can help you understand this aspect of divorce and ensure that the possible tax implications are considered.

Consult a Tennessee Divorce Attorney Today

Don’t do it alone if you are going through a divorce in Tennessee. Reach out to the experienced Tennessee divorce attorneys at Burch and Stewart. We are here to guide you through the divorce process and help you make informed decisions about your financial future. Contact us online or call us today at 931-954-1066 to schedule a consultation.