The tax reform laws that went into effect early last year have had a significant impact on American taxpayers, especially couples with diverse or valuable assets who are attempting to obtain a divorce. Fortunately, there are a few tax strategies that can help divorcing couples reach a settlement agreement that is in all parties’ best interests. For help navigating your own complex divorce, please contact a dedicated high asset divorce lawyer who has the resources and experience to assist and advise you.
Selling the Family Home
Spouses who have made the decision to file for divorce are encouraged to take a number of steps that could assist them with their tax situation following the dissolution of their marriage. Selling the family home, for instance, can save couples a significant amount of money following divorce. This is largely due to the fact that property taxes are now no longer fully deductible, which means that if one party retains the family home, he or she could end up with a much higher property tax payment that in previous years. Similarly, selling secondary real estate or vacation homes can help couples consolidate their funds and secure their financial future going forward.
Negotiating the Value of Dependents
Tax experts also recommend that divorcing couples with significant assets who also share children, negotiate the value of those dependents during the settlement process. This is an important step because the recent tax reform also lowered the exemption that a parent can claim for each child, although the child tax credit was increased from $2,000 to $1,000. Unfortunately, that credit begins to phase out for those with $200,000 or more of income. However, this can be countered through negotiation by allowing the lower-earning spouse to claim those credits in exchange for other assets.
...