Four Things You Need to Know About Taxes and Divorce
Getting a divorce can be complicated, stressful, and emotionally challenging. With so much going on, it is easy for some more mundane things, such as tax issues, to get overlooked. That being said, forgetting about taxes could be a major financial mistake — a divorce has the potential to have significant tax consequences. You need to be prepared. Below, our Clearwater divorce attorney highlights four key things that you need to know about taxes and divorce in Florida.
- Proper Organization is Especially Important
Disorganization is one of the main reasons why people run into tax trouble. When you are going through a divorce, careful organization of all financial documents and records becomes even more important. Simply put, it is easy for things to get confused or forgotten. By keeping everything well-organized, you can dramatically reduce the risk of making a mistake. Save every document and record and get them to an attorney or tax professional.
- Divorce May Impact Child Tax Credits and Deductions
A separation can have an enormous impact on the child tax credits and child tax deductions that your family is eligible to take. As explained by the Internal Revenue Service (IRS), only parent is typically allowed to take advantage of child tax credits and tax deductions. If you are getting divorced and you have children who are under the age of 18, child tax credits and deductions must be considered.
- Beware of Potential Tax Penalties
In some cases, divorcing couples make mistakes and subject themselves to wholly avoidable tax penalties. One of the primary examples of this is the early withdrawal penalty associated with retirement accounts. If you are dividing retirement assets in your divorce, an experienced Largo, FL family law attorney can help you set up a qualified domestic relations order (QDRO) to help you avoid adverse tax consequences. Please understand that you can split tax advantaged retirement savings in your divorce without getting hit with an early withdrawal penalty.
- Tax Reform Eliminated the Alimony Deduction
Finally, divorcing couples should know that there has been a major change in the tax treatment of alimony. Under the Tax Cuts and Jobs Act of 2017 (TCJA), alimony is no longer tax deductible to the spouse making the payments. If you are getting divorced and you expect to be paying spousal support, it is important that you adjust for the fact that you will no longer be able to get an alimony deduction on your federal taxes.
Discuss Your Case With Our Largo, FL Divorce Lawyer Right Away
At the Law Office of Gale H. Moore P.A., we are committed to protecting the financial interests of our clients. If you have any questions or concerns about divorce and taxes, our Florida family lawyer is here to help. For a completely confidential consultation with a divorce attorney, please do not hesitate to contact us at our Largo law office today. We serve individuals and families throughout Pinellas County, including in St. Petersburg, Indian Rocks Beach, Safety Harbor, and Dunedin.