Aaron Weems for Fox Rothschild writes: Aaron Weems' article "Tax Considerations When Filing
for Divorce" was published in the June 2014 issue of The
Matrimonial Strategist. A synopsis is noted below.
Most people do not base their divorce or separation around
tax-planning options. Tax issues are often left until an asset is
sold, or the end of the year approaches without the prospect of a
divorce decree being issued. Some tax liabilities should not be
afterthoughts. This article highlights tax liabilities that can be
of particular importance during a divorce.
Child Exemptions – Who gets to claim
children on taxes is a frequent debate between parties. Some states
allow their courts or domestic relations offices to assign
exemptions between the parties while some are reluctant to make
such a determination, and instruct the parties to follow IRS
regulations.
Child Tax Credit – The Child Tax Credit
is perhaps the most easily identifiable tax issue that arises
during a divorce. Who may claim the child is a major area of
dispute between parties.
Sale of the Marital Residence – The sale
of the "main home" is a common occurrence in divorce
cases. When a main home is sold, the IRS allows capital gains to be
excluded from income taxes; a benefit that, when planned correctly,
can create a significant opportunity for both parties to maximize
their portion of the sale proceeds.
The Innocent Spouse and Relief from Joint
Liability – Due to divisions of labor and
responsibilities in marriage and relationships, one person will
know, but not really know, how their finances work. For separated
and divorced individuals, there is relief available through the IRS
to alleviate a joint tax liability under certain circumstances.
Deducting Legal Fees Related to Divorce –
Another difficult reality of litigating a divorce case with
significant or complicated assets is that the parties are
responsible for paying those legal fees with their post-tax income.
As a general premise, people cannot deduct legal fees related to a
divorce. However, the IRS does allow for the deduction of fees
related to the taxpayer's obtaining taxable alimony.
0 comments:
Post a Comment