Any Florida couple that has weathered a divorce understands that the costs can be high. This is especially so for any high asset divorce or complicated divorce situation. The financial impact can be felt in many ways including the loss of personal assets as part of a property division agreement, the need to pay child support or spousal support and more. Unlike many other out-of-pocket costs , those costs associated with divorce are typically not tax deductible, only adding to the sting for many people.
However, a recent article in the media reported on some nuances in the law that allows for a two very specific divorce-related costs to be able to be deducted from a federal tax return. For both, the amounts are only able to be deducted if they are greater than two percent of the person’s adjusted gross income. Additionally, any bills documenting the expense must detail the activities clearly and indicate how much of the total bills related to the particular deductible amounts.
Any legal fees incurred in order to collect alimony, either as part of an original settlement, an agreement modification or other action, are tax deductible. This is because the alimony itself is taxable income. It should be listed on the Schedule A of tax form 1040. Similarly, any paid professional advice or research related to dependent tax exemptions or the transfer of property can be listed as itemized deductions.
While the majority of professional expenses incurred from a divorce or separation are not deductible, the ability to deduct even a small amount can be helpful to people. It may be a good idea to talk to your divorce attorney about these issues early on to get the right assistance.
Source: Huffington Post, “What’s Deductible for Legal Fees When Couples Divorce,” Julian Block, February 3, 2014