The April 15 deadline for individual and joint filings is now past, but this does not mean it is time to forget about taxes until next year. The division of marital assets is a crucial part of the divorce agreement, so it can be a substantial misstep not to consider the tax obligations attached to these assets. Moreover, it is particularly essential for business owners or those with an extensive portfolio of assets and investments.
An experienced family law attorney can help their clients find creative (yet legal) ways that help to minimize unnecessary tax obligations. This strategy can save money and offer benefits when it comes time to split the assets.
5 tax issues to weigh in divorce
The following will directly impact returns this year and in the years to come. Failure to address them can lead to unnecessary penalties:
- Capital gains: It is common to sell the family home or other significant investment that can trigger capital gains tax. It may make sense to sell when the couple is still married and enjoys the higher threshold.
- Post-divorce spousal maintenance recapture: The IRS could require spouses to report alimony or spousal maintenance income.
- Filing: Couples filing jointly have certain advantages, so tax strategies for individual filing should be examined.
- Dependents: Only one parent can claim a dependent, so it is wise to consider where that exemption can be most impactful.
- QDROs: Review the rules on qualified domestic relations orders’ impact on pensions and retirement benefits to maximize their tax benefits.
Work with professionals
The family law attorney can handle the bulk of the details involved in the divorce. Still, there may be real estate agents, accountants and even appraisers who can help strategize in ways that maximize the family’s assets during this time of transition.