Paul DeJesse, Jr. | Charlotte, N.C. Family Law Attorney and Board Certified Specialist in Family Law
Whether you are negotiating support payments or distribution of assets, it is important to consider the tax ramifications. For instance, child support payments are not considered income to the recipient. Furthermore, the payor does not receive a tax deduction for child support payments. To this extent, child support is a nontaxable event. However, spousal support may be includable in the recipient’s income and tax deductible to the payor. If there is a gross disparity in income and the payor is in a 35% tax bracket, there can be significant tax savings to the payor.
In reaching a property settlement agreement, often the parties will agree to trade one asset against another. Many times, people fail to properly contemplate the tax consequences. One asset could trigger a taxable event upon sale while another may not. To put it simply, you want to make sure you are comparing “apples to apples.”
If you have additional questions, please be sure to seek the services of a qualified tax professional before making any decision related to income taxes. If you have questions about child support, separation, divorce or other family law matters please contact us.