With the tax filing deadline coming up, our firm is reminded every year that divorced couples don’t always know what to do their first year filing taxes. Divorce is challenging enough and throws people into a different economic and tax bracket based on a change of income. Here are 3 things to look for when filing a divorce that can have an impact on your taxes.
Custody and Tax implications of Children
Parents take for granted the deduction allowable for a dependent. When filing for divorce, parents need to think about the tax implications and the ways in which a deduction for dependents is awarded. If there are 2 or more children in the marriage and each parent can claim at least one dependent. However when there is only one child, Central Kentucky attorneys recommend that the parents alternate claiming dependents. Deciding which parent gets the deduction is important and often one of the first things clients need to think about when sitting down with an attorney.
Selling a Home and other assets to better divide them
If selling the marital residence is ordered by the Court, or just a way for you to better divide the assets, you won’t have the opportunity to deduct your mortgage interest paid in the future. Additionally, selling assets could count as income if the asset has grown since it was purchased. Think about your today and your tomorrow, and recognize where you might face some tax issues. If you can’t see it without a professional’s help, that’s ok. That’s why we have C.P.A.’s to review assets and evaluate small family businesses during the divorce process. Your trusted Tax Advisor and Family Law Attorney should work hand in hand to advise you on the best course of action.
Mediation is Key
Lastly, as with many other types of legal disputes, often Divorce comes down to money. How much will you get depends on the length of the marriage, the types of assets, and how those assets came to you. Rather than walk into a courtroom and ask a judge to divide your assets, it’s best to find a trusted mediator to help both parties in a divorce come up with their own way to divide the assets.
In Mediation, you can divide all assets and work toward a permanent custody and timeshare solution that will be incorporated into the final settlement agreement. It’s a challenge, but with the right tax advice and guidance by a Kentucky family law attorney many going through the divorce process emerge with what’s necessary to take the next step forward in their lives.
Want to learn more about the tax implications of divorce, contact the A.M. Brown Law Office to learn more and schedule your free phone consultation.