Tax & Financial Planning in a Divorce
Financial settlements mean little in a divorce if spouses accept them without understanding their tax implications. Countless tax issues can be relevant, including:
- Assuring that taxes are calculated at the lowest rate possible until a divorce becomes final.
- Timing a divorce correctly and reporting an accurate filing status on a return.
- Preserving finances when a spouse’s tax strategies waste assets, prevent tax filings, or cause legal problems with the I.R.S.
- Verifying that estimated payments, credits, deductions, losses, carryforwards and deficiencies are handled appropriately.
- Understanding which divorce-related attorney fees, if any, are deductible.
- Considering the tax consequences of maintenance payments.
- Understanding the effects of the basis of property transferred between spouses: assets, income-producing property, partnerships and S-corporations.
- Grasping the tax implications of child support, dependency exemptions and child tax credits.
- Realizing the tax implications of child and dependent care credits.
- Properly claiming child medical expense deductions.
- Determining whether payments meet the I.R.S. requirements for taxable maintenance or whether they are cash payouts.
- Calculating the taxes on gains (after exclusions) from the sale of a marital residence.
- Claiming mortgage interest and real estate taxes properly on tax returns.
- Recording the timing of maintenance payments, especially at year’s end.
- Invoking the “Innocent Spouse Rule” when necessary.
To learn more about properly structuring a financial settlement or to better understand the tax implications of your existing divorce settlement, telephone a ZRFM divorce lawyer at (815) 459-2050 or contact us using the form provided on this Web site.