Elmhurst Divorce Lawyers for Tax Considerations

Attorneys for Tax Issues Related to Property and Support in DuPage County and Cook County

The end of your marriage is likely to be difficult, no matter your financial situation, but high net worth divorce cases are often much more complicated than others. Due to the complexities involved when either or both spouses earn a large income or own significant assets, determining how to reach an outcome that is fair to both parties can seem like a daunting task. One issue that may be overlooked is how your divorce will affect your taxes.

The attorneys of Weiss-Kunz & Oliver, LLC are highly experienced in complex divorce cases, and we understand the legal and financial issues that you will need to address in order to reach a favorable outcome to your case. We are prepared to help you negotiate a marital settlement agreement that addresses taxes and other financial concerns. However, if a settlement cannot be reached, we will advocate for your interests when litigating your divorce in the courtroom, and we will fight to protect your rights and your financial security. We have substantial experience in both arenas, negotiating a settlement or litigating your trial.

Tax Implications of Divorce

Since you and your ex-spouse will no longer be married, you must file taxes separately following your divorce. However, if you were still legally married as of December 31 of the previous year, you are allowed to file taxes jointly for that year. Doing so can offer some financial advantages, but you will want to make sure the two of you agree on how to divide any tax refunds or who is responsible for paying any taxes owed.

During the divorce process, you may need to address a variety of tax-related issues, including:

• Deductions and exemptions - If you and your spouse share children, only one of you will be able to claim them as dependents per year. In many cases, the parent with the majority of the parenting time (known as the custodial parent) will claim the child(ren), although you may reach an agreement in which each parent claims one child or parents alternate in claiming dependents each year. A custodial parent may also be able to realize other tax benefits related to children, such as tax credits for child care expenses. We can help you explore these options.
• Property division - When dividing marital assets, you and your ex-spouse may transfer monetary funds or other property to each other, and taxes will not apply to these transfers incident to a divorce. However, the division of assets may have other tax implications. For instance, if the marital home or other assets are liquidated during divorce, capital gains taxes may be owed. If one spouse will continue to own the family home or other real estate property, he or she will be required to pay property taxes. When dividing retirement accounts or pensions, taxes may be owed on funds that are withdrawn, although penalties can usually be avoided by using a Qualified Domestic Relations Order (QDRO). We understand the various tax ramifications of your divorce, and we will help you navigate these issues.
• Financial support - If spousal maintenance (also known as alimony) is awarded to one spouse, or if a parent is required to pay child support, income taxes will apply to the payor's income before payments are deducted. The recipient of support payments will not be required to pay taxes on these amounts.
• Business interests and investments - If either spouse is a business owner, the profits earned by the business may be taxed as part of his or her personal income. Spouses will want to understand how these taxes will affect income for purposes of calculating support and dividing property. In addition, a business or other investments may have untaxed gains or losses from previous years that will be carried forward. These can represent significant assets or liabilities, and they will need to be factored into the divorce settlement. Finding money hidden in a business that has already been taxed during the marriage is another specialty of Weiss-Kunz & Oliver, LLC.

Contact a Chicago Complex Divorce Attorney

During your divorce, you will want to be sure that you fully understand how your taxes will be affected. At Weiss-Kunz & Oliver, LLC, we will help you create a divorce settlement that addresses these matters and ensures that you can maintain financial security in the years to come. To arrange a consultation, contact us today by calling 312-605-4041. We serve clients Cook County and DuPage County, including Chicago, Park Ridge, Skokie, Elmhurst, Hinsdale, Oak Brook, Burr Ridge, River Forest, and Lincolnwood.