Finances can become tight during and after divorce. As a result of limited financial resources, many individuals going through a divorce spend at least some time contemplating what the financial future will hold. The smartest response to these financial concerns is for individuals going through a divorce to begin thinking of the various ways in which to maximize the amount of money that an individual does have. Unfortunately, many expenses related to a divorce are not deductible, but in some special cases individuals are able to deduct costs that are directly related to a divorce.
Many individuals do not realize that legal fees paid to collect alimony are tax deductible on Schedule A of Form 1040. In order to collect this deduction, however, the total of fees used to collect alimony must exceed two percent of an individual’s adjusted gross income. Individuals are also unable to deduct attorney fees incurred to pursue a child support claim or modification. Many individuals find it essential to contact an experienced divorce attorney who can determine whether or not an individual will be able to deduct an amount paid for alimony in one’s taxes.
Another substantial cost that is tax deductible is advice that individuals receive from lawyers concerning tax matters. There are several requirements that this cost must satisfy in order to be considered tax deductible. If individuals receive advice from an attorney concerning tax preparation or tax related matters, this amount can only be deducted if the attorney’s bill specifies the amount incurred by an individual for just tax counseling. A second requirement is that an individual can only deduct their own legal fees.
Some common examples of tax advice that individuals might receive from an attorney include: details on the tax consequences of divorce, how to respond to alimony obligations, or information about dependency exemptions. If individuals pay for spouse’s legal fees then this amount will not be considered tax deductible.
Another group of fees that is considered tax deductible are expenses paid for receiving information for qualified retirement plans. If a retirement account was generated with taxed income and is not taxable upon withdrawal then fees paid to an attorney for assistance with the retirement plan are also likely not tax deductible.
If you are involved in a divorce, it is frequently to understand just what amounts might be tax deductible to help reduce potential financial burdens and maximize the amount of money that an individual has available. Do not hesitate to contact a seasoned Birmingham divorce attorney at Alabama Divorce & Family Lawyers, LLC for more information about tax deductibles fees in addition to learning about how the firm can help you navigate through the divorce process.
$2,000 -FOR- 3 months
Many divorces can be completed in this time.
$10,000 -FOR- 1 year