Divorce Tax Planning Abroad
Filing status changes, QDRO for retirement accounts, FEIE impact, child dependency, foreign property division, and dual-jurisdiction complications.
Current Situation
Key Considerations
📋 Filing Status Change
Moving from MFJ to Single or HOH significantly affects brackets and standard deduction. HOH requires maintaining a home for a dependent child — this can be your foreign home.
💰 QDRO — Retirement Division
A Qualified Domestic Relations Order (QDRO) splits retirement accounts without triggering the 10% early withdrawal penalty. This applies to 401(k) and employer plans. IRAs are split via the divorce decree directly.
🏠 Foreign Property Division
Transfers between spouses incident to divorce are tax-free under §1041. But foreign property may have local transfer taxes, and the receiving spouse takes the carryover basis.
Non-Citizen Spouse: If divorcing a non-citizen spouse, the §1041 tax-free transfer rules still apply. But the non-citizen spouse won't have US filing obligations unless they have US-source income.
Alimony: Post-2018 divorce decrees: alimony is NOT deductible by the payer and NOT taxable to the recipient. Pre-2019 decrees follow old rules (deductible/taxable).