Taxable Events & Implications
Why Taxes Matter in Divorce
Dividing property, transferring assets, and adjusting income streams during divorce can create unexpected taxable events. Without proper planning, these tax consequences may reduce the true value of your settlement. For individuals divorcing after 50, understanding the tax implications of divorce decisions is essential to protecting long-term financial security.
At Piedmont Divorce Planning, we help clients navigate the complex tax issues in divorce through detailed financial analysis, ensuring that settlements are structured for fairness and efficiency.
Common Taxable Events in Divorce
Divorce often triggers tax consequences you may not anticipate:
Retirement Account Transfers: Moving funds without a QDRO (Qualified Domestic Relations Order) can result in taxes and penalties.
Property Division: Selling the marital home or investment properties may create capital gains taxes.
Alimony and Support: Under federal tax law, alimony is no longer deductible for the payer or taxable to the recipient (for divorces finalized after 2018).
Investment Assets: Dividing stocks or mutual funds may lead to gains or losses when sold.
Tax Filing Status Changes: Shifting from “married filing jointly” to “single” or “head of household” affects deductions and credits.
Why Tax Planning Is Crucial After 50
For couples divorcing later in life, tax decisions have amplified consequences. With retirement approaching or already underway, you have less time to recover from costly mistakes. A well-structured divorce financial analysis ensures that you:
Avoid unnecessary tax penalties.
Protect retirement savings.
Anticipate future tax liabilities.
Preserve cash flow for retirement and lifestyle needs.
The Role of Divorce Financial Analysis
As a Certified Divorce Financial Analyst® (CDFA®) and Certified Financial Planner™ (CFP®), Heather Ashworth Failla helps clients by:
Identifying taxable vs. non-taxable events in asset division.
Modeling the tax impact of different settlement scenarios.
Coordinating with tax professionals to maximize efficiency.
Ensuring that asset division and support arrangements align with long-term goals.
Protect Your Settlement from Hidden Tax Costs
Divorce is emotional—but it’s also financial. Without careful planning, hidden tax liabilities can erode the value of your settlement. With expert analysis, you can move forward with clarity and confidence.
Frequently Asked Questions About Taxes in Divorce
Q1: Are retirement account transfers taxable in divorce?
Not if handled correctly. Retirement accounts divided by a QDRO or direct IRA transfer can avoid taxes and penalties. Without proper documentation, withdrawals may be taxable.
Q2: Do I have to pay taxes when selling the marital home in divorce?
Possibly. You may qualify for capital gains exclusions ($250,000 for individuals, $500,000 for couples), but divorce and timing can affect eligibility.
Q3: Is alimony taxable in Georgia?
For divorces finalized after 2018, alimony payments are not taxable to the recipient and not deductible for the payer under federal tax law.
Q4: How does divorce affect my tax filing status?
Your status depends on whether you are legally divorced by December 31 of that year. Post-divorce, you will typically file as “single” or “head of household” if you qualify.
Q5: Why is tax planning especially important after 50?
Because retirement is near or already underway, tax mistakes can quickly erode savings and cash flow. Planning ahead ensures you preserve assets and maintain financial stability.