VOWS OF POVERTY
Whatever drives a couple to divorce, it's all but guaranteed that the emotional turmoil that results will be joined by financial stress. The process isn't cheap, and not all the costs are obvious.
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.
Mediation certainly represents a less contentious and costly way to divorce than litigation, but it's not cheap by any means: According to Money Crashers, total costs including the mediator's hourly fees are often somewhere between $3,000 and $7,000.
LOSS OF CHILD TAX BREAKS
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.
HIGHER TAX BRACKET
Even without kids, you can still take a tax hit because of a divorce. That's because tax laws — though they've been in flux — generally benefit married people, divorce attorney Karen Covy notes. Take an example from Business Insider: Last year's tax changes moved a single filer with income just under $40,000 into the 22 percent tax bracket; married filers making $77,400 were put in the 12 percent bracket filing jointly. (Sometimes the opposite is true, however — high earners with similar incomes may pay more when married.)
Noncustodial parents are likely to be on the hook for child-support payments. The average payment was $430 a month, according to the 2010 Census, but how much is paid depends on factors such as location, income, number of children, child-care expenses and health care expenses, All Law notes. Child support is not tax-deductible for the payer, or considered taxable income for the payee.
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. And while alimony has been tax-deductible for the payer (though taxable income for the payee), that changed Dec. 31 under new tax laws. This affects about 600,000 taxpayers annually, the IRS says, mostly the wealthy, but could lead payers to look for ways to pay less.
CAPITAL GAINS TAXES
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.
THERAPY OR COUNSELING
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.
INCREASED LIVING EXPENSES
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.
LOSS OF PRODUCTIVITY/WAGES
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.