What things should we consider regarding divorce and taxes?

With so many questions on divorce and how it affects your taxes, this article compiles a list of commonly asked questions, and points to a person who can answer them: a Certified Divorce Financial Analyst.

By Cathleen Collinsworth
March 02, 2010
CA FAQ/Financial Issues/Tax Issues

Many issues need to be addressed whenever two people decide to get divorced. One major issue is income taxes.

Some of the more common questions are:

  • Do we file jointly or separately?
  • Do we have to allocate the income, and if so, how?
  • Do we have to allocate the expenses, and if so, how?
  • My spouse is self-employed. Who pays the self-employment taxes?
  • Who gets credit for the estimated tax payments?
  • We have one child. Who gets the deduction?
  • We have more than one child. Can we split the deduction?
  • I paid a lot of attorney and accounting fees. Can I deduct them?

The following is a list of some of the issues that a Certified Divorce Financial Analyst and tax professional can bring to the table that attorneys and the participants in a divorce often overlook. This list is not all-inclusive:

  • Discounting Epstein credits for the tax benefits
  • Weighing the risks of filing a joint return
  • Considering the child support trap of IRC § 71
  • Not fighting over the dependency exemption when the client can’t use it
  • Considering if both can be head of household
  • Not assuming that the capital-gains tax is based on the client’s share of the proceeds
  • Evaluating whether attorney’s fees can be deductible or capitalized
  • Not considering the tax traps in dividing stock options.

There can be significant tax implications when the parties divorce, you owe it to yourself to consult a financial professional (forensic accountant, CPA, and/or CDFA) to make sure you and your attorney understand all of the financial and tax implications of your divorce.


Cathleen Collinsworth is a lawyer at Forensic Accounting Offices in Orange & Riverside County, Irvine & Menifee, California. She can be reached at 949 262-3692 or 951 679-8940 or thru email. View the firm profile here and firm website here www.cccdfa.com.

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March 02, 2010
Categories:  Financial Issues|FAQs

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