Be sure you know the tax consequences before finalizing your divorce.
Pittsburgh, PA (PRWEB) January 09, 2013
Couples dealing with divorce have unique tax considerations, says consultant Nan Cohen, author of “Dealing with Divorce: Reality Revealed.”
New income tax tips featured on Cohen’s website are designed to help couples navigate IRS tax complexities after they divorce.
“Divorcing spouses need qualified tax preparers to make sure they receive the best outcome,” says the divorce coach, “but it’s also essential to analyze tax implications prior to consenting to the final agreement so there are no surprises down the road.”
Issues such as claiming children as dependents and child income tax credits are taken for granted while a couple is married, but may have a long term implications for both parties in the future. Cohen advocates that it is important to discuss these issues with financial professionals and attorneys before agreeing to settlement.
“While child support, alimony, filing status and who gets to keep the home are issues typically top-of-mind during divorce negotiations," says Cohen, "many fail to understand the true impact these matters will have on their taxes once the ink is dry on their divorce agreement.”
For example, alimony payments are taxable to the recipient and deductible by the payer, yet child support payments are neither taxable nor deductible. The divorce agreement must clearly designate which payments are for which purpose. In addition, there are also multiple options on filing status both before and after the divorce. In the case of a jointly owned home where the agreement requires one spouse to pay all of the expenses, regulations exist concerning what is taxable and deductible for both parties.
For the complete list of tax tips go to Nan Cohen’s website.
Cohen reminds divorcing couples that if a divorce is finalized in April 2013, the husband and wife won’t be asked to look at these factors again until at least January or February of the next year, 2014.
“When that time comes it may be too late to make changes,“ says Cohen. ”While married, the couple likely shared the same accountant and financial advisors. Just like everything else in the divorce, one party will retain these advisors and the other party should get recommendations from professionals, family and friends to find new advisors. This can help to avoid any potential conflicts while getting a fresh start.”
As a divorce consultant and coach, and host of the radio show "Dealing with Divorce", heard the first Saturday of each month on KDKA News Radio 1020 and Thursday evenings on KQV, Nan Cohen’s job is to make sure her clients and listeners are aware of the complexity of issues in a divorce and to demystify and reveal the reality of divorce so they can be guided to make the right decisions.