Many people use TurboTax or a do-it-yourself approach to doing their yearly taxes. This works out fine and people are happy with the results and continue this method year after year. But this system does not always work as well the year of your divorce. There are unique tax circumstances you need to consider the actual year you are getting divorced and longer-term tax consequences as a result of your divorce agreement.
There are specific tax-related issues to consider about your divorce and you can address all of them during the divorce mediation process. Who is claiming the children for tax purposes? This may have an impact on your tax bill. Should the lower earner always claim the kids? Alternate years? It may also have a small effect on the monthly child support amounts. And the timing of your divorce can affect your tax bill. If it is close to the end of the calendar year then you may want to wait until the following year to actually get divorced. It may not matter to you much if your divorce is finalized in late December or early January, but it does to your state and federal government and the subsequent tax bill.
While the divorce mediators at Westfield Mediation, LLC, are not accountants or tax experts, they are knowledgeable enough to know that these professionals should be a part of your divorce team before signing a final divorce agreement. The mediators have a list of mediation friendly tax experts in the area to pass along to our clients and always recommend that you have a tax expert review your agreement. For example, when allocating various retirement accounts in a divorce settlement, it is important to distinguish the difference between one account that has pre-tax money and will have taxes taken out during distribution and another account that has post-tax money contribution and will not have taxes taken out when it is time for distribution. At the time of your divorce the accounts may have equivalent values so you think you are dividing things equally, like you intended. But when you retire, one of you has a lot less money because Uncle Sam takes a chunk and the other still has the full value of the account that you thought it had.
These are things that the turbo tax program will not tell you, but a mediator will. It is ultimately up to you, with input from your tax expert, to make these decisions. However, the mediator can help you figure out what these tax issues may be and work with you to reach educated, informed decisions about your taxes now and for the future.
For more information on divorce and divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M.Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at [email protected].
There are specific tax-related issues to consider about your divorce and you can address all of them during the divorce mediation process. Who is claiming the children for tax purposes? This may have an impact on your tax bill. Should the lower earner always claim the kids? Alternate years? It may also have a small effect on the monthly child support amounts. And the timing of your divorce can affect your tax bill. If it is close to the end of the calendar year then you may want to wait until the following year to actually get divorced. It may not matter to you much if your divorce is finalized in late December or early January, but it does to your state and federal government and the subsequent tax bill.
While the divorce mediators at Westfield Mediation, LLC, are not accountants or tax experts, they are knowledgeable enough to know that these professionals should be a part of your divorce team before signing a final divorce agreement. The mediators have a list of mediation friendly tax experts in the area to pass along to our clients and always recommend that you have a tax expert review your agreement. For example, when allocating various retirement accounts in a divorce settlement, it is important to distinguish the difference between one account that has pre-tax money and will have taxes taken out during distribution and another account that has post-tax money contribution and will not have taxes taken out when it is time for distribution. At the time of your divorce the accounts may have equivalent values so you think you are dividing things equally, like you intended. But when you retire, one of you has a lot less money because Uncle Sam takes a chunk and the other still has the full value of the account that you thought it had.
These are things that the turbo tax program will not tell you, but a mediator will. It is ultimately up to you, with input from your tax expert, to make these decisions. However, the mediator can help you figure out what these tax issues may be and work with you to reach educated, informed decisions about your taxes now and for the future.
For more information on divorce and divorce mediation, please contact Randi M. Albert, JD, or Michelle Weinberg, M.Ed., Licensed Marriage and Family Therapist, at Westfield Mediation, LLC at 908.913.0373. View our website at www.westfieldnjmediation.com or email us at [email protected].
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