Nobody likes a surprise letter from the Internal Revenue Service saying he or she owes more taxes. When your divorce is over, you want to be sure that you don’t later discover you owe taxes you weren’t expecting to pay. A number of tax issues may arise in your divorce. Your attorney may not be able to answer all of your tax questions, so consulting your accountant or tax advisor for additional advice might be necessary. In fact, most family law attorneys I know will not provide tax advice, including myself.
Taxes are important considerations in both settlement negotiations and trial preparation. They should not be overlooked. Taxes can impact many of your decisions including those regarding alimony, division of property, and the receipt of benefits. Be sure to ask the professionals helping you about the tax implications in your divorce so you don’t get that letter in the mail that begins, “Dear Taxpayer:…”
Neither yourself nor your spouse will have to pay income tax when we transfer property or pay a property settlement to one another, however, it is important that you see the future tax consequences of a subsequent withdrawal, sale, or transfer of certain assets you receive in your divorce.
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