303 W. Main Street, West Dundee, IL 60118
 | 847-428-7725
Call for an Initial Consultation
Evening and Weekend Hours by Appointment
100 Illinois Street, Suite 200, St. Charles, IL 60174
 | 630-200-4882
By Appointment Only
Evening and Weekend Hours by Appointment
West Dundee, IL847-428-7725
St. Charles, IL630-200-4882
Facebook Twitter LinkedIn
Search
Serving Kane, McHenry, DuPage and Cook Counties

How Can Getting Divorced in Illinois Impact Your Taxes?

Posted on in Divorce

 geneva tax lawyerEverybody knows that divorce is expensive. Separating a couple’s finances, often after many years together, is a complex endeavor that results in both parties owning less than what they shared together. Many divorcing couples are so focused on the asset division process that they forget to protect themselves in the future and not just in the present. 

The long-term financial consequences can often have a greater impact on a divorced individual than the temporary circumstances they find themselves in immediately after the divorce is over. The potential tax implications of divorce are one of the most important parts of an individual’s finances. Understanding how divorce can affect your taxes is important for future financial success. 

Marital Home Ownership 

The asset division process can significantly impact a person’s taxes in the present and the future, especially if a parent feels strongly about keeping the marital home. They may be willing to give up other assets, including savings and investment accounts, only to discover that the expense of the house is too much for them to bear. Property taxes in Illinois are notoriously high, and this can place an additional expense on a homeowner to the tune of many thousands of dollars. 

Child Tax Credits

Tax credits are often as good as money in a parent’s pocket, and determining who gets to claim a child on their taxes can greatly impact a parent’s overall financial picture from year to year. When parents are married, they can jointly claim their child on their tax return. After divorce, however, only one parent can claim a child - even if the parents share responsibilities and parenting time equally. It is important to make a plan for who will claim any child tax credits, especially if the child is still young and can be claimed for many years to come. 

Retirement Account Taxes

Generally, the division or transfer of 401k accounts or other retirement money is not subject to tax. However, after the divorce is final, any tax liabilities or penalty rules apply to money or payments that are withdrawn. Divorcing couples should ensure that their retirement accounts are included in their divorce decree and think twice about taking money out of accounts to pay for expenses resulting from the divorce. The tax penalties for prematurely taking money from an investment account can be substantial and the IRS has specific procedures that must be followed when dividing retirement assets. 

Speak with an Elgin, IL Divorce Attorney

With all the other things to think about during divorce, the tax implications may be the last thing on your mind. A Geneva divorce attorney with Law Offices of Benedict Schwarz, II P.C. can help you understand the long-term financial implications of your divorce, advocate passionately for your rights during the divorce, and help set you up for success now and in the future. Contact our offices at 847-428-7725 today to schedule your initial consultation. 

 

Source:

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2086&ChapterID=59&SeqStart=6000000&SeqEnd=8300000

  • Illinois Best Law Firms
  • Super lawyers
  • Attorney Registration and Disciplinary Comission
  • Lawyers Association Program
  • Illinois State Bar Association
  • Kane County Bar Association
  • DuPage Bar Association
  • Martin Dale
  • aacfl
Back to Top