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What are Tax Concerns That Same-Sex Couples Face During a Divorce?

Published March 2, 2020

The divorce process can be overwhelming, especially as you are suddenly facing major shifts and changes in your life. As you and your soon-to-be-ex navigate the divorce process, it is important to familiarize yourselves with additional tax implications that your divorce may carry. Both heterosexual and same-sex divorces are impacted by tax complications, so let’s take a closer look at how these issues may affect your marriage and divorce.

The Marriage Tax Penalty

Whether you are in a heterosexual or same-sex marriage, the Marriage Tax Penalty will likely apply if you and your spouse both have similarly high incomes. As you and your spouse file taxes jointly during your marriage, this combined high-income level is subject to higher tax rates. However, if there was a large discrepancy in your individual income levels, then a portion of the higher wage-earning spouse’s income would typically enjoy a lower tax rate.

Determining Alimony

One of the most challenging aspects of any divorce is establishing alimony payments (also known as spousal support payments). Typically, the divorce court orders the higher-earning spouse to make alimony payments to the lower-earning spouse in order to help both spouses adjust to their newly uncoupled lives. However, same-sex divorces are additionally murky to navigate, as the court must first establish how long the marriage or relationship lasted in order to calculate a fair spousal support agreement.

In general, the longer the marriage lasted, the more it influences how much the higher-earning spouse will be ordered to pay. In divorces involving same-sex partners, does the court recognize the marriage as lasting for four years (since it was nationally legalized in 2015), or for eleven years (if the couple lived together in a domestic partnership before being legally allowed to marry)? Depending on how the court measures the duration of the union, the alimony agreement will vary rather significantly.

Communicating Your Wishes

Although same-sex divorces are similar to heterosexual divorces in most ways, there are a few aspects that require additional information and finesse. For many couples, the collaborative divorce process offers the support and guidance necessary to explore all of your options and to communicate your goals. If you and your partner are considering a divorce in the Portland area, Lee Tyler Family Law, P.C. is here to help. Call (503) 233-8868 today to learn more about our collaborative divorce services.

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