When divorce is on the horizon, many Florida spouses focus on issues related to property division. This is a valid approach; other than child custody matters, the financial fallout from a divorce will have the greatest impact on the future lives of each spouse than any other aspect of the divorce process. For couples who will divorce in 2013, the range of new tax issues included in the American Taxpayer Relief Act will affect the bottom line of each party, and should be carefully considered.
One example lies in the new threshold for the highest earning taxpayers. In 2013, when an earner reaches $400,000 in adjusted gross income, he or she will enter the highest tax bracket, at 39.6 percent. For a spouse who is receiving alimony, those payments are factored into adjusted gross earnings, and can push an individual above that threshold.
As a result, someone whose earnings approach that level should carefully consider how alimony could factor into their tax equation. In some cases, it would be financially advisable to decline alimony payments within the divorce settlement in exchange for other financial gains. One example could be that the party who would be responsible for paying alimony might assume other financial burdens instead, such as maintenance and upkeep of property that the party entitled to alimony will retain in the divorce.
When ending a Florida marriage, it is imperative that both parties make financial decisions that make sense for their individual goals and aspirations for the future. Poor choices or decisions made from an emotional standpoint instead of a financial one can reduce the income of both parties, and simply result in additional taxes. Divorce may mark the end of one period in one's life, but is also a new beginning. Focusing on the future instead of the past is a savvy step toward a successful outcome for all involved.
Source: Huffington Post, "Divorce Tax Tips: Five Most Common Tax Questions," Joseph E. Cordell, Jan. 29, 2013