Tax Traps to Avoid During a Georgia Divorce
People who are getting divorced are often surprised to learn of the many different tax problems that result from divorce proceedings. All too often, divorcing couples fail to consider the tax consequences of their actions, which can have disastrous results if they don’t get the proper advice and make the right decisions about tax-related issues.
One common problem that divorcing spouses encounter is what to do when their income taxes are due and they are not yet divorced. In an ideal situation, the spouses would cooperate to file a joint tax return since they are still married. The difficulty there, however, may be deciding which spouse will pay any taxes that are due to the federal or state government, or, in the alternative, which spouse will be entitled to the proceeds of any federal or state tax refund. In the case of a tax refund, it may be beneficial for the parties to use the proceeds to pay down any joint debt that they owe. If they cannot decide on who should get the refund, however, the proceeds always can be held until a court makes that decision.
A related tax problem that often arises following a parties’ divorce involves the claiming of the parties’ minor children as dependents for federal and state income tax purposes. If there is no court order yet in place that decides this issue, one spouse may try to file taxes first in order to get the benefits from claiming the dependency exemptions before the other spouse has a chance to do the same. Additionally, even where there is a court order in place governing whom is eligible to claim the children on taxes, that eligibility may be dependent on a certain level of compliance with child support obligations. The two parents may disagree as to whether one parent should have claimed the child or not, based on the child support that has been paid or not paid.
Other tax issues may arise with the division of the couple’s property and assets. When real estate or stocks are sold, for example, there will be taxes owed. Again, if the parties cannot reach an agreement as to whom shall bear responsibility for those taxes, the court may have to intervene and make that decision for the parties.
Contact us or call today to learn how Shaw Law can work with you to achieve the best outcome possible for you and your children.
Scott Shaw is founder and principle of Shaw Law Firm LLC, founded in 1995 and dedicated solely to divorce, family law and child custody matters that must be addressed and decided in the state of Georgia. Shaw Law Firm serves the greater Metro Atlanta area, particularly the counties of Fulton, Gwinnett, Cobb, Cherokee, Forsyth, Paulding, Henry, Fayette, Coweta, Newton, Walton, Bartow and Douglas. Schedule a consultation today at 770-594-8309.