On behalf of The Law Offices of Mary Ann Beaty, PC posted in Divorce on Wednesday, February 1, 2017.
Divorce for Texas spouses carries many legal and emotional consequences. Like most every other life events, however, the tax laws and finances also play a role in the divorce process for couples that can be life altering.
Marital status at the end of December determines the type of tax return that should be filed and can affect financial planning and divorce decisions. Because spousal support is taxable to the recipient, for example, a spouse may consider filing for divorce after the New Year. Child support though, is not taxable. Withholding on paychecks may also need to be changed from married filing joint to the single category.
Identifying marital assets is also another important part of tax planning. It is important to consider their future worth. Assets include not only houses and property, but also security holdings and investments and their unrealized losses and gains. It is important to determine their value before and after taxes before deciding how these assets should be split with the other spouse.
Financial documents may become important evidence in a court hearing. Therefore, it is also important to obtain access to important financial documents on marital property, such as deeds and mortgages, in addition to tax returns and forms, records on retirement, stocks and credit card and bank statements. Gathering these documents is a tool to learn about the marital income, resources, debts and liabilities, which can help with the creation of a new budget.
Finally, moving out of the marital home without good reason can lead to losing any access and should be carefully considered. A temporary restraining order can help keep a violent spouse away from the house, if needed.
A lawyer can help a spouse with this financial planning and decisions on issues, such as continuing to live in the marital home and other divorce legal issues. Legal representation can help seek disclosure of important documents and protect rights in legal proceedings and settlement negotiations.
Source: The Street, “Divorce tax tips to make your split less of a financial burden,” Tracy Byrnes, Jan. 27, 2017