Tax Consequences For Divorcing Couples
When a couple is going through a divorce, it is not uncommon for them to feel completely overwhelmed by the process. While they may be completely comfortable with their decision to end their marriage, there are many other decisions that they will have to make at this time. They need to know that these choices will have real-life consequences, and need to be sure that they are prepared for what happens after the marriage ends.
In many divorces, there will be several discussions concerning the assets and debts of the couple in order to try to find a property division agreement that is fair to both sides, which is required under Colorado law. Depending upon the assets that the couple may own, and also the time the property was acquired (whether it was before or during the marriage), the parties may spend a considerable amount of time working toward an agreement.
Some couples may have retirement accounts or other significant assets that they need to divide. This can be especially challenging if one of the spouses stayed at home in order to allow the other to focus on his or her career. Couples need to be extremely careful when dividing the retirement assets as there may be significant tax consequences as a result of this distribution.
If the couple has children, they will need to decide who will claim the kids for tax purposes. Depending upon the couple’s economic situation, it may be more advantageous for one spouse to claim them. This should be part of the property division discussion, so that there are no surprises at tax time.
Couples also need to be aware that there are tax consequences if spousal support payments are ordered by the courts. The spouse making these payments is able to claim the payments as a deduction, while the person receiving it will have to claim it as income.
The prospect of a divorce can lead to many questions, and you might not know where to turn to find answers. You should speak to an experienced family law attorney in order to receive advice that is tailored toward your unique situation.
Your attorney will help you prepare for the process, so that you understand what might happen once you take those first steps. Your spouse may not want to go through with the divorce, and may make it very difficult for you to move forward. It is important that you have someone on your side that can help you focus on the important issues that you need address. You do not want to get caught up in the emotions of the divorce.