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Subscribe to this list via RSS Blog posts tagged in divorce and taxes

Elgin divorce attorneyIf you are going through a divorce, the first thing on your mind may not be taxes or financial issues; however, it is important to know that a divorce does have tax implications. Your filing status, tax consequences of maintenance payments, property transfers, and more are typically decided by your divorce judgment/order and affected by any new tax law changes.

A division of assets agreement should take into account any tax issues so there are no surprises later. If you are ending your marriage, a knowledgeable divorce attorney can help you prepare for any financial consequences.

Asset Division 

When a couple negotiates how to divide marital assets or property during a divorce, it is imperative to consider the areas that may have potential tax implications. Most marital property does not incur a tax liability if transferred, but you should consider the potential tax consequences of considerations such as:

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Elimination of Alimony Tax Deduction May Make Divorce More Expensive

Carpentersville spousal support lawyerThe federal government’s recent tax reform bill, which was passed in December 2017, could have a major impact on divorcing couples. Under the new plan, alimony payments in divorces that are finalized after January 1, 2019 will not be tax deductible for the payor or be counted as income for the payee.

Tax and legal experts say that this will make divorce more expensive and will likely hurt the spouse receiving alimony. Alimony, the term used by the federal government, is also called spousal maintenance or spousal support in Illinois.

Taxes and Spousal Maintenance

If alimony is awarded in a divorce case, it will be paid by the higher-earning spouse to the other spouse for a finite period of time. In some cases, maintenance is ordered on a temporary basis between filing for divorce and the finalization of the divorce process, and the divorce decree will specify the amount of maintenance payments and the duration that payments will last after the divorce has been completed. Often, alimony is paid to the spouse who cares for children and cannot work outside the home.

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