Tax Issues in Divorce

Tax Planning in a Divorce

Contentious issues in a divorce can become heightened when tax considerations are factored in. Our lawyers at Taylor, Ganson & Perrin, LLP, help our clients develop final orders that minimize tax liability for the entire marital estate after a divorce. To learn how tax issues should be considered when devising final orders for matters such as property division, child support, custody, and alimony, contact us.

We use our years of experience advising individuals and trusts about tax matters to help our domestic relations clients minimize their tax liability during a divorce.

As with all issues related to divorce, our attorneys strive to educate clients on the costs and benefits of different tax-reducing strategies. Some of the issues that should be considered when undertaking tax planning during a divorce include:

• Whether paying or receiving alimony or child support can be structured to provide a tax advantage
• Who pays capital gains tax from the sale of marital assets
• Who pays delinquent income or property taxes
• Whether an alimony award should be structured according to gross income or net income after tax
• Which parent claims the income tax deduction for dependent children
• Which attorney fees are deductible
• Which parent can claim the head of household deduction
• Which parent can claim the child care credit
• Who pays for any tax liability incurred for any jointly filed returns, past, present or future

In many of these instances, the parties can alternate income tax deductions/exemptions. For example, they can agree that one of them will claim the childcare credit the first year, and the deduction for a dependent child the next year. This needs to be formalized in a tax plan so there are no surprises to either party. The resulting agreement also needs to have some flexibility that accommodates tax law changes that might affect either party.

The analysis required to determine the best way to structure final orders in a divorce in light of tax considerations is complex. Our attorneys use our many years of experience handling tax matters for individuals and trusts to devise plans that save as much of the marital estate as possible. To learn how we can help you with tax planning in a divorce, contact us at Taylor, Ganson & Perrin, LLP.