St. Charles Attorneys for Tax Implications in Divorce

Kane County Divorce Lawyers Helping Clients under Potential Tax Implications

Getting a divorce has a number of tax implications, and many of them are not for the better. Understanding how your divorce will impact your tax liability can help you create a strategy to minimize your taxes. It is important to hire an attorney who is not only skilled in handling divorces but who is also well-versed in tax law.

At the Kane County divorce law firm of Goostree Law Group, we are knowledgeable about tax law and divorce. Our attorneys advise our clients on how to minimize tax consequences and maximize tax advantages during the marriage dissolution process. We strongly advocate for our clients' interests throughout their divorce proceedings.

Tax Strategies While Divorce Is Pending

Throughout the divorce process, spouses are still legally married. This can raise questions about how to best file your taxes when your divorce is not yet finalized. It can sometimes be beneficial, from a financial standpoint, to file income taxes jointly during the divorce proceedings or even after the divorce has been finalized. A couple can file a joint tax return as long as they were legally married at the end of the year for which they are filing. That is, if the date of divorce was January 1 or later, the couple can still file taxes jointly for the previous year, but they cannot file taxes jointly for the year in which the divorce was finalized.

It is easiest to file a joint tax return when spouses can work together amicably, but a judge can also rule on how taxes should be filed in a contentious divorce. Sometimes, a judge will order that taxes should be filed jointly to preserve more of the marital estate.

Tax Implications of Divorce Settlements

Taxes can impact virtually every decision that is made when negotiating a divorce settlement. A skilled attorney will factor in all possible tax implications to make sure his or her client is in the most favorable position. Our attorneys are mindful of how taxes will affect various divorce matters, including:

  • Property division - When dividing assets in divorce, it is important to consider how taxes will impact the distribution. Two seemingly equivalent assets may be taxed differently, which would affect their intrinsic value. How certain assets are transferred can also have tax consequences; when transferring funds in a retirement account between spouses, a Qualified Domestic Relations Order (QDRO) should be used to avoid penalties or taxes for early withdrawal.
  • Alimony/maintenance – Spousal support payments are not considered to be taxable income for the recipient, and they are not tax-deductible for the payor.
  • Child support - Child support payments cannot be deducted from the taxable income of the paying parent, and they are not considered taxable income for the receiving parent.
  • Child custody – The custodial parent of a child is usually the one who is permitted to take the dependency exemption. Other tax advantages may also be available, including the Child Tax Credit and the Child and Dependent Care Credit.

Contact Our St. Charles Divorce Attorneys for Tax-Related Issues

If you are planning a divorce or have already begun divorce proceedings and have questions about the tax implications you may face, contact us at 630-584-4800 to schedule a free consultation. Our attorneys will go over your specific financial circumstances, answer your questions, and provide our experienced recommendations on how you can minimize your tax liability. We work with clients all over Northern Illinois, including Kane County and the surrounding areas.

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