Divorce and taxes | Lane & Lane, LLC
Lane & Lane, LLC Lane & Lane, LLC
The Experience To Find Your Solution
Call Today: 908-524-0788
Toll-free: 888-533-9154

Divorce and taxes

Taxes play an important role in the daily lives of many individuals. In addition to taxes on income, one must consider tax implications on a variety of decisions that he or she makes. For this reason, when a New Jersey couple decides to divorce, taxes should be an important consideration in developing the divorce agreement and property settlement.

One of the first considerations is that the tax filing status will change to either head of household or single. If there is a child that resides in the home more than half of the year, head of household is most likely the proper option. With that in mind, there is also the question of who claims the children as dependents for tax purposes. Typically, this is stated within the divorce agreement, with the custodial parent retaining this right. However, it is possible that the couple may come to another agreement, such as alternating years.

Another consideration is that the household income will most likely be less than in previous years. This may necessitate the need to adjust tax withholdings. This can be adjusted by changing the number of exemptions claimed on the W-4 form.

Finally, investments can affect taxes as well. Retirement accounts are typically tax free until they are accessed. When one is transferring these funds as part of the property settlement, it is important to remember to make sure that this is done in a manner in which the account remains tax free.

When it comes to divorce, there are many things to consider. In addition to who gets what and who pays what, one needs to also keep taxes in mind. This can have a significant impact upon a New Jersey individual as he or she moves on after the dust has settled.

Source: wtop.com, "5 things women should know about taxes after divorce", Dawn Doebler, March 22, 2017

No Comments

Leave a comment
Comment Information