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Alimony decisions have tax implications during divorce

An essential aspect of dealing with the end of a marriage in Montana is planning for the tax-related consequences. Unfortunately, taxes are often among the least understood aspects of a divorce. A couple of tips may help with addressing taxes and another particular divorce matter that often sparks conflict: alimony.

If one spouse earns a lot more than the other spouse, that spouse may end up having to pay alimony, or spousal support, to the other spouse following the divorce. However, different tax strategies may be utilized to shift earnings from the better-paid spouse to the spouse who earns less. One of these strategies involves providing what is called unallocated support.

Unallocated support is not classified as either child support or alimony. Instead, this support may be based on contingencies associated with the couple's shared children. For instance, perhaps the higher-earning spouse will agree in the divorce decree to pay the lower-earning spouse support until their children reach certain ages, get married or land jobs.

Alimony issues are inherently complex, but the tax aspects can make dealing with them even more challenging. Fortunately, a family law attorney in Montana can help with making smart decisions in addressing this and other divorce issues. This is critical whether a couple decides to try to resolve issues involving alimony or the division of property, for example, at the negotiation table or instead opt to go to trial to have a judge decide these matters for them. To the extent that the parties can achieve a fair agreement directly, they both can avoid the added expense and unknown outcome of a proceeding litigated in court.

Source: Forbes, "Taxes And Family Law: A Cheat Sheet Of What You Need To Know", Stephen Hicks, Sept. 8, 2017

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