7 Tax mistakes to avoid during and after divorce in Birmingham
Divorce and taxes are not fun in themselves, so, understandably, many individuals are hesitant to consider how a divorce can affect their taxes. However, if you are getting divorced and have any marital property, thinking about the tax repercussions of divorce now could save you from paying a large tax bill later, making a tax filing mistake, or creating a financial position that is unfair to one or both spouses. Divorce lawyer Birmingham can assist you in navigating the difficulties of post-divorce taxation and maximising your savings.
Following a divorce, people frequently make the following tax mistakes:
- Both or the wrong spouse claim that the children are dependent.
- Splitting investments in such a way that it incurs hefty capital gains tax.
- Waiting until after the divorce is final to fill out the federal Qualified Domestic Relations Order (QDRO) form in marriages with one or more retirement plans.
- Selling the marital house after the divorce is final, and losing capital gains tax protection.
- The payer does not claim alimony (also known as spousal support) payments as a deduction, and the payee does not report them as income.
- Make a child support claim (as a deduction or income).
- Not deducting some legal and financial expenditures related to your divorce are permissible deductions.
This, like all tax-related concerns, can quickly become problematic. Some deductions are conditional on your ability to deduct other expenses. Others may depend on your marital status; for some couples, staying legally married for a few more months may be financially advantageous. Because alimony is often granted exclusively to couples in a high tax bracket, alimony-related difficulties can result in significant tax savings or penalties.
Avoid Having To Pay Taxes After Divorce
The lawyer will begin working with you before your divorce finalises to help you determine the optimal filing status for your case and avoid costly mistakes while dividing your assets. They can refer you to a qualified divorce taxes consultant who can help you grasp the nuances of your new financial status if you have complicated circumstances. And, if necessary, in your situation, approach the court for post-divorce revisions to your divorce decision that will allow you to keep as much money as possible.
To conclude, always check your case with an expert divorce lawyer, especially when financial matters are complicated.