During a divorce in New Jersey, both parties can waste a lot of time, energy and financial resources. This is especially true when it comes to the tax impact of transferring assets through the divorce.
Family law analysts identify three main mistakes that divorcees can avoid to save themselves money during tax season. The first error is paying attention only to the value of assets divided during the divorce. The ex who also gains a clear understanding of the future tax implications for the divisible assets is likely to find themselves in a much better financial position following the process.
One example of this first tip is a couple who both possess IRA accounts with $100,000 balances. One account is a traditional IRA, and the other is a Roth IRA. Many people will look no further than the balance of these accounts and declare them equal. However, the traditional IRA is subject to more taxes than the Roth IRA and does not hold the same value when balances are equal.
The second tip is for the benefit of the custodial parent in divorces that end with minor children in the home. The parent with whom the child spends most of their nights is entitled to the exemptions and credits designed by the IRS to lower tax liabilities for families.
The final tip is to remember the benefits afforded to taxpayers who are married. If a tax refund is pending, it can become part of the property division negotiations. Divorcees who possess interests in a business that showed a loss for the current tax year may also find it possible to reduce future tax bills.
The divorce process could represent one of the most stressful times in your life. This makes it easy to forget pertinent issues that may impact your life at a later date. However, an experienced family law attorney could look out for your best interests during the divorce process.