For New Jersey spouses, taxes can become an issue both in the process leading to the divorce and afterward. Every financial decision that they make needs to be done with an eye towards how it affects their tax situation. However, many people going through a divorce may not be thinking that far ahead.
One of the first issues to consider is how to file taxes before the divorce. The general rule is that the couple is still married until the time that the divorce is finalized. While many will file joint returns as a result, other couples just simply do not want to file together and will end up sacrificing some tax breaks. In addition, there are also tax implications depending on when assets are sold. The spouse who ends up with the physical asset as opposed to cash may end up having capital gains tax liability as part of their share. All of these things should be addressed in the divorce agreements.
Further, there have been numerous changes in the tax laws recently that have changed divorce. For example, alimony is no longer a tax deduction for the spouse who is paying it and it is not taxable for the recipient. There are also a number of state tax laws to be familiar with since they will impact finances.
A family law attorney could help their client understand the tax ramifications of the divorce. It may affect how the divorce agreement is negotiated. The attorney may factor that in when they seek to reach an agreement with the other side. These are considerations that many people overlook during a divorce as they are focused on the here and now. The lawyer’s role is to point out things that their client is not aware of that could impact their financial future.