If you’re getting divorced, you may not be thinking about your taxes. It’s a good idea to do so, though, because there could be tax implications depending on the way you move forward and how you divide your assets.
If you own a company or substantial assets, it’s even more likely that you’ll have tax issues to consider. Minimizing your tax burden is your attorney’s responsibility and one that you should focus on as you divide your marital estate.
How can your taxes be affected by your divorce?
There are several issues that can arise when you divorce. Tax issues such as these may impact your tax return now or lead to penalties that you didn’t expect. Some include:
- Capital gains taxes when you sell long-term investments
- IRS alimony recapture, which may force you to report alimony paid as income
- Tax consequences from the sale of your marital property or other real estate holdings
- Changes in your filing status for this tax year
- The division of dependency exemptions, which you may have if you have minor children or other dependents
- Qualified domestic relations orders (QDROs) for pensions or other benefits
You may also get caught up in trouble with your taxes if you are filing jointly and your spouse does not pay or makes a mistake on the return. If your spouse commits tax fraud, it’s important to work closely with your attorney to seek innocent spouse relief, equitable relief or separation of liability relief.
Tax issues are complex, and they are likely to occur during your divorce
The more complex your divorce is, the more likely it is that you’ll have tax issues to address. It’s a good idea to talk to an attorney who understands the potential tax implications of your divorce, so that you can be prepared for what might happen in the future.
If you have already gone through a divorce and are seeing tax problems now, letting your attorney know about those issues may help you make a plan to get out of, or stay out of, trouble with the Internal Revenue Service and resolve any current tax issues quickly.