There’s an old saying that only two things are certain – death and taxes. Thinking about both is usually about as unpleasant as sucking a lemon. Tax consequences of divorce are also a certainty, and can be equally as sour. Unpleasant as it may be, divorce and taxes go hand in hand. That means tax consequences of divorce are a key component to consider when mediating or negotiating your divorce settlement.
In this series we’ll look at some of the key tax issues to think about during your divorce. Having some information going into the process can help gain the clarity you need to have informed conversations with your attorney and your CPA to help them protect your interests.
Your divorce dream team
If you have substantial assets, your divorce dream team should have both substantial legal and financial knowledge. An expert team will give you the best chance of minimizing the negative tax consequences of divorce.
Your team should include an experienced divorce attorney, like ours at Hightower Reff, as well as a tax attorney or an experienced CPA.
When you choose collaborative divorce instead of traditional divorce, a financial expert is routinely a member of your collaborative divorce team, and can help with planning for your divorce and taxes.
First steps – filing status and figuring out a plan
For more on filing status and divorce, see IRS publication 504.
Watch for Divorce and Taxes Part II
Next time in the series, in Part II, we look at possible support payment tax pitfalls you may not have pondered when it comes to paying or receiving spousal support or child support.
This article should not be construed as legal advice. Situations are different and it’s impossible to provide legal advice for every situation without knowing the individual facts.
Author, Hightower Reff Partner Attorney Tracy Hightower, holds both a Juris Doctor and a Master of Laws in Taxation. For more about Tracy, visit her profile page.