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Tax concerns can crop up during property division

While annual tax filing is a regular, routine habit for most Houston area residents, changes in tax obligations can prove surprising following a divorce. Amidst all the hubbub of property division, there are plenty of tax-related considerations that divorcing couples can easily overlook while focusing on marital property, community property, and the like.

Unfortunately, the shaky U.S. economy doesn't seem to be helping clear matters up for splitting spouses. The divorce rate in America rose slightly from 2010 to 2011, with 877,000 couples filing for divorce in 2011 compared to 872,000 the previous year. During the worst years of the recession, however, the number of U.S. divorce filings actually dropped, according to the Centers for Disease Control and Prevention. Now that the economy has improved slightly from those years, more couples appear to be taking the initiative in starting-over.

What many don't realize, though, is just how much their tax burdens can change after un-tying the knot. For the spouse that keeps the formerly-shared home, for instance, the ability to keep paying the mortgage may depend on spousal support. If that support stops, he or she may have to sell the residence and pay taxes on capital gains. For those who may not be used to investing, capital gains taxes can come as quite a surprise. There are also property taxes to consider, which can be tough to tackle if both spouses aren't already earning separate, sufficient incomes.

There are also important tax distinctions between two common divorce-related issues: alimony and child support. Child support recipients do not pay taxes on that money, while those who receive alimony must pay taxes on their spousal support. Alimony is also tax-deductible to those who pay it. In some divorces involving very high incomes, the tax bill on alimony can prove financially insurmountable for those receiving support, and professional advice becomes vital.

Source: InvestmentNews.com, "Journey back from divorce can be taxing," Darla Mercado, March 24, 2013

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Attorney Christine K. Lincoln

Christine K. Lincoln offers sound counsel and legal services to protect clients and their families facing divorce and other family disputes.

She will take the time to understand your individual needs and develop a comprehensive solution to protect your rights and interests.

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