Taxes are often overlooked in divorce. Couples fail to discuss the payment of past and future taxes. They also forget to assign tax credits, dependency exemptions and deductions. To make matters worse, lawyers may also forget these issues and fail to advise their clients about the tax consequences of divorce.
All this forgetfulness can be troublesome for you, but it’s irrelevant to the IRS. The IRS will insist on prompt payment regardless of whether you considered taxes in your divorce. Use these tips to prepare for and, hopefully, avoid taxes in divorce.
- Read IRS Publication 504, which discusses important tax issues for divorced and separated individuals. It explains filing status, exemptions, property transfers, alimony, child support, retirement transfers and more.
- Read IRS Publication 971, which provides information about Innocent Spouse Relief. Innocent Spouse Relief may be available if you unknowingly signed a joint, fraudulent tax return with your husband or ex–husband.
- If you suspect or already know that your husband filed fraudulent tax returns, speak to an Enrolled Agent. An Enrolled Agent (EA) is a federally–authorized tax practitioner who has technical expertise in taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. Use the National Association of Enrolled Agents’ online search tool to find an EA.
- Hire a forensic tax accountant who specializes in family law. Forensic family law tax accountants are qualified to serve as experts in divorce trials. Their work usually meets the standards necessary to prove or disprove tax issues at trial and can provide insight about the consequences of your decisions. To find a qualified forensic family law tax accountant, ask your lawyer for recommendations.
- Meet your lawyer and forensic tax accountant during divorce to discuss taxes.
- Don’t bury your head in the sand. Tax issues are very complicated but can’t be ignored. With proper planning, you can structure a settlement that minimizes taxes and maximizes your post–divorce assets.
This article is not legal advice. You should consult an attorney
if you have legal questions that relate to your specific divorce. The Modern Woman’s Divorce Guide has no relationship with the organizations; agencies or programs listed above and does not endorse their services. We provide these links for your information only.
