New Jersey residents who are going through a divorce probably already know that the process can drain resources like money, time and energy. But a fact that is not as well known is that divorcees can trigger a tax problem for themselves if not careful when transferring assets as part of the divorce proceedings.
A family law attorney is likely to know several ways you can avoid tax problems as a result of your divorce. One piece of advice is for a divorcee to pay as much attention to the present and future cash implications of the asset that is being divided as he or she pays to its overall cash value. When only cash value is considered, many assets that are not equal in value appear to be so. Both traditional and Roth IRAs are examples of assets to which this concept can be applied.
A second bit of advice is for divorcees to take advantage of all tax credits available to them. This tip is likely to benefit individuals who take on the responsibility of being the custodial parent more than any other divorcees. The custodial parent is the person with whom the children spend most of their nights. If the kids spend equal time in the homes of both parents, the person making the most money assumes the title of custodial parent. These benefits are available because many tax credits exist for the benefit of parents with children in their homes.
Divorcees should also make sure they do not overlook the potential tax benefits due to them from the marriage. Upcoming tax refunds should be a part of the divorce settlement. Additionally, be sure that any stock or interest in a business entity transfers in a way that reduces future tax bills.
Tax implications that result from a divorce settlement are often an afterthought. However, divorcees who perform a little due diligence on this matter can save themselves a significant amount of money. People who have questions regarding the tax implications or other factors that a divorce settlement can cause may benefit from consulting with a family law attorney.