Whether you have average income or are a high-net-worth individual, it’s important to take a broad look at the tax implications before moving forward with a divorce. Sometimes, after looking at the bigger picture, it may be financially worth figuring out a way to make amends.
Below are a number of particulars and situations to consider whilst going through and after the divorce proceeding is over:
If you continue to pay for your child’s medical bills post-divorce, you can include those costs in the medical expense deduction even if your ex-spouse retains custody.
Consider which tax burdens you may have to incur with the transfer of property and capital gains taxes should you acquire property in the divorce then sell it later.
Only the parent who claims a child as a dependent can claim the $1,000 child tax credit, however, you can continue to claim the child-care credit for work expenses you have to take care of an under-13 child.
If you have to withdraw from a 401(k) to pay your ex-spouse after a divorce, then you will have to pay the tax. You could avoid this if you can get the transfer listed under a qualified domestic relations order (QDRO), which gives the recipient the rights to those funds and relieves you of the tax issue. That should be spelled out in the divorce settlement to clear up any potential questions down the road.
These are just some of the issues to consider, but with so many more above and beyond taxes on the table, it’s important to consult a knowledgeable divorce attorney in Butler or Warren County. Call the team at Garretson & Holcomb, LLC to learn more about how we can help guide you through a divorce.