Tax Issues in Divorce
In the wrangling over property division and support obligations, divorcing spouses (and many attorneys) often fail to consider the tax implications. This oversight could cost you thousands of dollars in proceeds or cause future trouble with the IRS.
At O'Brian & Associates, we pride ourselves on our comprehensive approach to divorce, including consideration of taxes. Our practice is geared for high net worth divorces, representing clients in King County, Snohomish County and the Greater Seattle area with significant federal and Washington state tax issues to consider. We encourage you to give us a call today to learn more about how we can guide you through these issues.
What Are The Tax Considerations?
Divorce creates some inevitable taxation, but many taxes can be avoided, reduced or deferred through proper divorce planning. Our law practice has been devoted solely to divorce and family law since it was founded in 1986. Susan Millican O'Brian leads a knowledgeable team of attorneys who can anticipate those tax matters and factor them into our negotiation or litigation strategy.
We will sit down with you to address all the applicable tax issues:
- Dependency exemption — Only one parent can claim the per-child tax exemption. Parents may alternate years or receive other consideration in trade for the tax credit.
- Capital gains — Selling off real estate or cashing in stock comes with a hefty tax hit. We incorporate taxable events into the overall settlement.
- Taxable income — Child support is not taxable income, but spousal maintenance is income to the recipient and a write-off for the payor.
- Obligations for taxes due — It may not be fair or practical for a couple to split their tax burden equally. We may write into the decree, for instance, that a spouse who earns 75 percent of the income pays 75 percent of the taxes.
- Retirement distributions — Dividing pensions and 401(k) accounts has no tax implications unless a spouse cashes in his or her share at the time of divorce. A disadvantaged spouse who needs the money should not be penalized for the tax hit.
These are just a sample of the tax considerations that may factor in your divorce. We rely on CPAs to give us reliable tax projections under your specific circumstances, for purposes of settlement talks or contested proceedings. We make sure that the court takes tax implications into consideration in determining financial support and distribution of property.
Experienced Representation In Complex Divorce
To discuss tax issues in divorce and all of your concerns, arrange a confidential consultation with one of our lawyers by calling (425) 276-7677or contacting us online. Our offices are located near the Microsoft headquarters, and we serve clients throughout the Eastside and the greater metro area.
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