Divorce can be a complicated process, especially when it comes to taxes. Divorce can have significant tax implications, especially when it comes to equitable distribution and child dependency/tax exemption.
For couples going through a divorce, understanding how to deal with tax issues can help make the process smoother and less stressful.
Update Your Filing Status
After a divorce, it’s important to update your filing status with the IRS. If your divorce was finalized by December 31 of the tax year, you can no longer file a joint tax return with your ex-spouse. You will need to file as either single or head of household.
Understand the Tax Implications of Child Support and Alimony
It’s important to understand the tax implications of divorce before finalizing the agreement. Familiarize yourself with tax laws and seek guidance from a tax professional or divorce attorney. Consider how equitable distribution and child dependency/tax exemption will affect your taxes. Be sure to consider the allocation of any child dependency/tax exemptions when negotiating the settlement.
Splitting Retirement Accounts
When dividing assets and liabilities, consider the tax consequences of each item. Some assets, such as retirement accounts, may have tax implications when distributed. Liabilities, such as mortgage debt, may also have tax implications.
Work with a tax professional and an attorney at Rigden Lieberman, LLC to determine the most tax-efficient way to divide assets and liabilities. Splitting retirement accounts during a divorce can also have tax implications. In order to avoid taxes and penalties, the transfer of retirement funds must be done in accordance with IRS regulations. A qualified domestic relations order (QDRO) may be necessary to divide the accounts properly.
Dealing with tax issues in a divorce can be complex and confusing. It may be helpful to consult with a tax professional to determine the best course of action for your situation. They can provide guidance on specific tax implications and help you avoid any potential tax pitfalls.
Schedule a Consultation at Rigden Lieberman, LLC
Dealing with tax issues in a divorce requires careful consideration and attention to detail. By updating your filing status, understanding the tax implications of child dependency/tax exemption, splitting retirement accounts properly, updating your withholding, and consulting a tax professional, you can ensure that you are properly addressing any tax issues during the divorce process.
It’s important to work with a tax professional or an attorney with Rigden Lieberman, LLC to ensure that your taxes are handled correctly and that you are not caught off guard by unexpected tax consequences.
