What are the Real Costs of Divorce?
Simply filing paperwork for a divorce isn't cheap, but what you'll pay varies by where you live. According to Divorce Writer, you could pay as little as $50 to $75 to file in Mississippi, or more than $400 in California. (Most states are around $150 to $200.) While fee waivers are available for very low-income filers, qualifying can be difficult.
Want to keep costs as low as possible, but still want some help filing? A legal document preparer can prepare forms using information you give them, though they won't provide legal advice. Expect this to cost anywhere from $175 to $700 depending on the complexity of the situation, Divorce Net advises.
A lawyer can help guide you through the divorce process, especially when there's a lot of bad blood. But divorce attorneys charge an average $250 an hour, according to Nolo. Unsurprisingly, that adds up fast: Those who went to trial averaged $15,800 in attorney's fees; those who settled spent $12,200 on average.
After a divorce, a noncustodial parent will no longer be able to claim child-related tax breaks unless otherwise decreed. According to the IRS, these include dependency exemptions, child tax credits, dependency care credits, head-of-household filing status or the Earned Income Tax Credit. The EITC alone can reduce tax burdens up to more than $6,200.
Even without kids, you can still take a tax hit because of a divorce. That's because tax laws -- though they're now in flux -- generally benefit married people, divorce attorney Karen Covy notes. Take an example from Forbes: A single filer with a $40,000 income would have been in the 25 percent tax bracket in 2015; married filers making $70,000 would be in the 15 percent bracket filing jointly. (Sometimes the opposite is true, however -- high earners with similar incomes may pay more when married.)
Even if child support isn't a factor, alimony -- that's spousal support -- might be. Alimony (and the standards used to award it) varies hugely from state to state. Factors that might affect how much support is paid or received include earning expectations, expenses, and whether the payments would let both parties maintain their current standard of living, according to Divorce Net. Unlike child support, alimony has been tax-deductible for the payer, and taxable income for the payee.
After a divorce, it's common for one person to stay in the family house with the kids and later sell the house to downsize. But be careful: Uncle Sam requires a house to be lived in two of the past five years before a sale to avoid hefty capital gains taxes on up to $250,000 in profit. To avoid this painful hit, make sure to give the IRS proof of divorce-related housing arrangements as laid out in the final divorce decree.
Losing health insurance can be a big financial pitfall if you've depended on a spouse's employer-based plan for coverage. Without access to your own employer plan, options include getting covered at HealthCare.gov or paying to keep coverage from a spouse's plan for up to 36 months through COBRA. Compare prices and the plans under what's been known as Obamacare usually wind up the winner, but there are reasons people might want to stay with the higher-priced coverage.
Sometimes a divorce means a stay-at-home spouse has to make a sudden return to the workforce. As Covy notes, that process can be expensive. Buying interview outfits (and potentially a whole office-appropriate wardrobe) can be costly: A suit alone can be $100 on the low end. Traveling to interviews, or additional job training or courses, can also be costly.
Divorce is emotionally draining, and therapy might be an integral part of working through the sadness, frustration, and other feelings that come with it. Counseling costs vary widely based on factors such as location and the therapist's level of expertise. Expect charges of anywhere from $45 to $350 an hour, experts tell Wevorce, though health insurance should ease some of the burden.
After a divorce, an income is often stretched to suddenly cover two households. Suddenly bills for day-to-day expenses such as utilities, insurance, cable and Internet, and groceries -- where there's no more bulk savings -- are a lot more painful, requiring stricter budgeting. The Divorce Center recommends strategies to help save, including negotiating discounts and paying monthly utility installments.
Divorce takes time, which may mean having to take up to 20 days off work in a year to meet with lawyers, make court dates or go to mediation, retired divorce attorney Brette Sember tells SheKnows. Many workers simply don't have that amount of vacation. If they are allowed to take the time, some of it is likely to be unpaid.