As tax season approaches, parties going through a divorce should pay particular attention to the practical side of divorce and taxes.
There are a number of tax related issues that should be considered in a divorce.
- Who will claim the children as exemptions?
- How will any future or past joint tax liability be divided?
- If a refund is coming, how will it be shared?
- Should stock options be exercised immediately or held?
- Who will pay the property tax on the family home?
- Is there any tax penalty for cashing out an IRA to pay the equalizing judgment?
- Would using non-taxable spousal support be helpful?
There are a number of questions that need to be addressed regarding taxes. Each situation differs, and you should discuss these issues with both your attorney and a Certified Public Accountant. A CPA can even help you run different tax scenarios to help determine the possible outcomes of different settlement options. Use your attorney and a CPA in concert to make sure that your tax concerns are met. A deal that looks good on paper may not be so appealing when the tax implications are examined, while on the other hand, good tax planning can open the door to some creative settlement solutions.