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S.T.E.P.S. - Smart, Tailored, Event-Driven, Packaged Solutions
provided by Women's Financial Network at Siebert
Taxes and Real Estate --
Part V
From alimony and child support to dividing valuable assets like houses and cars, divorcing couples have to consider many tax questions when working through the settlement process. If ever you need help with this part of the divorce proceedings, consult a tax attorney or accountant. They can help keep your taxes to a minimum.
While my divorce is pending, do I file my taxes jointly or single?
If your divorce isn't final by December 31st then you still have the option of filing a joint return with your spouse. - The IRS requires that your tax return reflect your marital status on the last day of the filing year.
- If there is a large gap in your incomes then it may be beneficial to file joint returns. It can save you dollars that could go toward legal fees and other divorce-related expenses.
What if I have kids?
There are tax credits associated with having children. - These credits are available to the spouse who claims the children as dependants.
- You'll need to decide which parent will financially benefit from them most and file accordingly.
Alimony and child support
Alimony and child support are taxed differently. - Alimony is considered earned income and is taxed as such.
- On the other hand, child support is not subject to income tax requirements.
Your house
In many cases, a couple's home is their most valuable asset. If you're awarded the house in your settlement, whether you choose to remain there or sell, you'll have serious tax implications as well as upkeep costs to consider. - Before you decide to remain in the house, be sure you understand the property taxes you'll be required to pay.
- Individuals are allowed up to $250,000 in tax-free capital gains when they sell their home. Couples are allowed $500,000. To qualify, you must have lived in the home for at least two of the five years leading up to the sale. There is no age requirement.
Continue to: Part VI: Insurance policies
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