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Tax Implications of Your San Diego Divorce

What are the tax implications of your San Diego divorce and how can you maximize the value of every dollar that leaves your account?  It is important to understand the net amount of money that will leave your accounts each year for child support, spousal support and other settlement agreements related to your San Diego divorce.  How can you maximize the tax implications in your San Diego divorce case?

For example, child support is neither tax deductible to the payor nor is it taxable to the recipient.  Spousal support, on the other hand, is taxable to the recipient and tax deductible for the person making the payment.  California provides a seldom-used option for “family support.”  Family support is a combination of spousal support and child support.  If the divorce decree or separation agreement specifies the payment of “family support” but no amount of the payment is designated specifically as “child support” the entire payment may be deducted by the payor but must be considered as income to the recipient.


Why would anyone agree to this?  The answer is simple.  The amount received after taxes is higher than the separate payments of child support and spousal support, while the amount payed is less after the tax deduction.  This “win-win” is a positive option for each party, but often overlooked by San Diego divorce attorneys.  You need the attorneys at Allen Barron to help you understand the tax implications of your divorce.

Another taxable consequence involves the sale of a business ownership interest.  The same concept applies to a portfolio of stocks.  You may have two separate stock groups, each with a market value of $100,000 however they are not “equal.”  If the taxable basis of one group of $100,000 valued stocks was $10,000 and the other had a taxable basis of $40,000 the difference in actual value of the two assets is more than $30,000 to the recipient.

The experienced tax attorneys at Allen Barron provide insight and expert counsel to those who are concerned about the tax implications of your San Diego divorce and the strongest possible position after the completion of a divorce.  If you have substantial assets and are considering a divorce in San Diego we invite you to call for a free consultation regarding the tax implications of divorce at 866-631-3470.