How Will Your Divorce Affect Your Taxes?
As you negotiate a divorce settlement or prepare evidence for a divorce trial, you should understand the impact your divorce may have on your taxes. Our tax law attorneys at Gudeman & Associates, P.C., can provide the informed perspective you need regarding taxes and your divorce or any family law issue, such as child custody and support for unmarried parents.
Our tax law practice is extensive. Considering the great many financial matters that a divorce will touch on, it is no wonder that family law attorneys often send their clients to our firm for advice and guidance. We pride ourselves in our firm’s proven effectiveness for clients facing financial challenges such as divorce.
A Sampling Of Tax-Related Issues To Watch Out For In Your Michigan Divorce
Some tax topics to examine along with your divorce include the following:
IRS filing status: If you have been filing joint tax returns, your filing status may be about to change to that of a single person. To limit your tax burden during this transition, you and your spouse might decide to wait until the beginning of the following year to finalize your divorce. You also need clarity about who will pay any taxes due on the last joint filing and how any refund will be allocated.
Child support and tax credits: The IRS does not tax child support for the recipient nor does it allow the paying parent to take it as a tax deduction A parent with primary custody will be allowed to claim a child as a dependent and will be eligible for child tax credits ($2000 per child in 2020 and $3600 in 2021). Review information from the IRS, and ask one of our attorneys to review how the rules will apply to your custody and support arrangements.
Capital gains from the sale of real estate: The spouse who keeps and then possibly sells the marital home may be liable for capital gains taxes.
Division of retirement accounts: If you have a 401(k) or other untaxed retirement assets, be sure to divide these assets (if appropriate) through a qualified domestic relations order (QDRO) so the fund transfer will not be taxed as a withdrawal.
What Other Tax Issues Should You Be Asking About?
Ask a Michigan attorney about areas of caution regarding taxes and your divorce. Call us at 248-630-3671 or complete a simple online form to schedule a free 30-minute consultation with no further obligation.