If you are like most people who initiate divorces in the first month of the year, chances are that you are trying to decide what to do with your taxes, even though you are getting ready to go your separate ways. However, knowing what to expect with your tax bill could influence your financial settlement.
At the same time, you want to protect yourself from surprises that may come about after the divorce is finalized. Essentially, you don’t want to be left holding the bag for tax avoidance shenanigans that occurred during the marriage without your knowledge.
This is why talking about taxes is an important aspect of settlement negotiations. This post will highlight a few issues you should be aware of.
Will you be subject to capital gains taxes?– If you end up selling the your home or any investment properties as part of your divorce settlement, be mindful that you may have to report any additional income stemming from these sales. Basically a windfall may lead to capital gains taxes if the additional income is not properly distributed.
How will the child tax credit be allocated?– Divorcees may battle over custody and parenting time because one parent wants full control over decision-making. However, the award of child support can be equally as troubling. Aside from child support, how the child tax credit is allocated is an important question, since it may be equal to a month’s (or sometime two months) worth of child support payments.
If you have additional questions about how taxes will affect your post divorce life, an experienced attorney can help.