How Divorce Affects Taxes

For couples with a combined income of $612,350 or more in 2019, income taxes are actually higher than if the two were unmarried. However, marriage still offers a number of other benefits that couples lose access to if they divorce. Georgia couples who are considering a divorce should keep these benefits in mind.

One might be health insurance that covers the entire family. In many cases, one person may carry this insurance through an employer for children and a spouse. After a divorce, the other person might have to seek health insurance that could cost $12,000 annually or more. Another benefit is the ability of a working spouse to contribute to an IRA for a spouse who does not work outside the home. Finally, if a couple divorces and one person owns a business, the other spouse might be able to claim ownership of a significant portion of the business. This could mean the ex-spouse ends up with voting rights.

However, there are situations in which some couples might seek a divorce for financial reasons. If one spouse needs nursing home care, getting a divorce can be a way to access Medicaid without paying down all the couple’s assets first. If a college-age child is applying for financial aid and the custodial parent earns significantly less money than the other parent, more aid might be available.

Whatever the reason for getting the divorce, these and other issues may need to be worked out. For some couples, negotiation may be less expensive and stressful than litigation. Even if the divorce is high in conflict, mediation might help the couple resolve their differences enough to reach an agreement. The idea behind mediation is to find a solution that suits both parties as opposed to the more adversarial approach of litigation.

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