Taxes and Divorce in Illinois: Information You Need to Know

At Glasgow & Olsson, we believe in creating a sustainable divorce order that will not require frequent modifications. By taking into account the complete financial picture at the time of the divorce, we can avoid future court battles. Divorces are emotionally intense and financially complicated; the less time spent litigating is usually the best option for everyone. It is essential to anticipate circumstances that may arise and create a divorce order that can accommodate them, as many courts are hesitant to modify the decree once it has been established.

​​The division of taxes is a crucial but often overlooked aspect of dividing marital property, as most people tend to think about splitting assets. Many people only focus on tax issues when filing their returns, but it is just as important as income and support payments. To ensure a fair financial outcome for both parties, it is crucial to consider both the short- and long-term tax consequences.

Do I File My Taxes Jointly or Separately While My Divorce is Pending? 

Legally, spouses remain married until a judge grants a divorce. According to the IRS, a couple who is married for any part of the year is generally considered married for the entire year. However, it is not uncommon for a spouse to refuse to sign a joint tax return or cooperate in its preparation. If this happens, it is important to seek legal advice from experienced divorce attorneys as there may be alternatives to filing a “married filing separately” return.

Potential Tax Deductions

Schedule A may allow for the deduction of certain attorney fees, while spousal maintenance is generally taxable income and a deductible expense. Child support, on the other hand, is neither taxable nor deductible. The custodial parent usually receives the dependent tax exemption, child tax credit, and related items, but this may be negotiable.

Although maintenance payments are generally deductible, property division payments are not. The IRS has strict rules in place to prevent parties from reclassifying property division as spousal maintenance, and it is best to seek advice from a tax professional. Our attorneys often collaborate with qualified professionals during divorce or modification proceedings to provide our clients with the best possible information.

Tax Liabilities 

Fixed assets, such as real estate, present unique tax considerations that can change over time. Tax liability on a primary residence may increase as the mortgage interest deduction gradually reduces and eventually disappears. Conversely, assets like revenue-producing real property may depreciate, resulting in lower tax liability. These factors are influenced by both changing tax laws and individual circumstances that can fluctuate, especially during a divorce.

If You are Going Through a Divorce, Glasgow & Olsson Can Help

Tax issues have both short- and long-term implications for a divorce. If you are experiencing a divorce and have questions about the tax matters involved, our attorneys are prepared to handle the matter. Glasgow and Olsson can provide high-quality representation for divorces in Cook County. When you need an attorney, experience matters. Contact us today to learn how our experience can get you the results you deserve.