Florida Divorce Settlements & Taxes
Equitable Distribution (Division of Assets)
Taxes should be considered in any divorce settlement in Florida. In Florida, equitable distribution or the division of the marital assets in a divorce is an area that effects your financial future. It is our goal to ensure that your best interests are protected in any contested divorce, and particularly when there are high assets involved.
The marital home is another area that requires apt legal counsel and representation to ensure that any sale of the marital home will consider gains or losses and if applicable, negotiated into your divorce settlement. In fact, in most contested divorces, the largest marital asset is the martial home. If you decide to sell the home and split the proceeds, you may be able to exclude up to $500,000 depending on your filing status.
Many spouses who jointly own a home decide it’s best to sell it and split the net proceeds. If you take this route, you have to report your share of any gain or loss on your taxes. However, you may be able to exclude a certain amount of the gain if you file jointly or separately. Additionally, if divorcing spouses transfer property from one to the other there is generally no gain or loss recognized by the IRS. Transfers that occur within one year of the end of your marriage or that is related to your divorce is not taxable so long as both of these conditions apply:
- The transfer is made under the original or modified divorce settlement
- The transfer occurs within six years of the end of your marriage
Florida Alimony & Taxes
The tax code on alimony changed in 2019 so any amounts are not tax deductible for the payer and is no longer income for the payee. This means if you are paying alimony, taxes will apply. Your Tampa divorce attorney must be able to navigate and negotiate these areas for you, to ensure that your rights and your financial future is protected.
Read More: Florida Divorce, Alimony and Taxes 2019
IRS Rules that determine what counts as alimony:
You can’t deduct alimony payments made under a divorce or separation agreement (1) executed after 2018, or (2) executed before 2019 but later modified if the modification expressly states the repeal of the deduction for alimony payments applies to the modification. Alimony and separate maintenance payments you receive under such an agreement are not included in your gross income.
A payment is alimony or separate maintenance if all the following requirements are met:
- The spouses don’t file a joint tax return with each other
- The payment must be made by cash, check, or money order
- The payments are made to a spouse or former spouse pursuant to a settlement agreement
- The settlement agreement doesn’t say the payments are for something besides alimony
- The spouses don’t live together if they’re divorced or legally separated
- The payments don’t continue after the death of the receiving spouse
The following payments are not considered alimony:
- Child support
- Noncash property settlements, whether in a lump-sum or installments,
- Payments that are your spouse’s part of community property income,
- Payments to keep up the payer’s property,
- Use of the payer’s property, or
- Voluntary payments (that is, payments not required by a divorce or separation instrument).
Florida Child Support, Alimony & Taxation
Child support payments are neither tax deductible for the paying parent, nor counted as income for the receiving parent. Changes in the tax law eliminated the child dependency exemption through 2025, but doubled the child tax credit for kids under age 17 from $1,000 to $2,000. When considering alimony, child support obligations must also be considered. In Florida, child support takes precedence over alimony however, child support obligations may make alimony financially difficult, thus, reducing or eliminating alimony altogether in some cases.
Retirement, Taxation & QDROs
QDRO or Qualified Domestic Relations Order is a document that should be included in your final divorce settlement. This permits funds to be withdrawn from one spouse’s retirement account and given to the other spouse without the normal tax penalties associated with early withdrawals. Nilo J Sanchez & Associates highly recommends hiring an experienced Tampa divorce attorney to ensure that you have a soundly drafted QDRO.
Learn more: QDRO Florida Divorce & Retirement Accounts
Nilo J Sanchez & Associates represents divorcing couples in contested and high net worth contested divorces with sound, aggressive legal strategies and solutions to ensure that your divorce settlement is in your best interest. Getting it right the first time when you’re divorcing is crucial so that you’re not burdened with future need for modifications or enforcement of orders. Attorney Sanchez has specialized in Florida Family Law for over 25 years in Tampa Bay and is equipped to provide you with the representation that you need and deserve. Helping divorcing clients to move forward into a safe and secure future is our main focus.
Martial Settlement Agreements & Litigation
Attorney Sanchez has the skill you’ll want when it’s time to negotiate a successful marital settlement agreement, including any taxation matters in high net worth and contested divorces. Finally, although most divorces settle out of court, should your case go to trial, you’ll rest easy knowing you’re being represented by a seasoned Tampa divorce litigation attorney.
Contact Nilo J Sanchez & Associates
If you would like to schedule a consultation with Nilo J Sanchez & Associates, please call 813-879-4600 or leave us a secure message below.