Tax advice for divorcing couples

Many couples who are pursuing a divorce in Florida may need to consider how taxes might affect the process. Divorce renders one legal entity, the married couple, into two separate individuals. This has direct effects on annual tax returns, and the taxes levied against certain assets after the divorce is finalized might influence how couple distributes their assets during the property division process.

Until the divorce has been formally completed, the separating spouses will have the choice of filing their taxes as married filing separately or married filing jointly. Couples who file separately will often experience a higher tax rate, but this protects either party from liability if the other party fails to pay his or her share. Once the divorce is finalized, both parties must file as single, which generally includes a lighter tax burden than married filing separately.

The property division process is also greatly affected by tax considerations. In many cases, especially in amicable divorces where there is broad agreement on a fair division of marital property and a willingness to cooperate, both parties might make certain concessions in an effort to reduce the tax burden for both sides. However, certain assets are more exposed to capital gains tax than other assets, which can make dividing properties equitably difficult.

It may be beneficial for some couples to seek professional assistance when they become involved in a divorce. An attorney might be able to help a client keep track of certain tax considerations throughout proceedings, allowing both parties to reach an agreement that provides for their financial future after the divorce has been finalized.

Source: Nerd Wallet, "Divorce: Making Sense of the Confusion", J. Kevin Stophel, June 03, 2014

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