I’ve written before about the emotional roller coaster that can come along when it’s time to divide assets during the divorce process. Today my colleague Jen Green offers the first of several tax rules – and their consequences – for transferring certain property between former spouses. Stay tuned next week for her assessment of additional tax rules in Part 2.
Dividing the marital property pursuant to a divorce can be quite stressful. Nevertheless, it is important to understand the tax ramifications when distributing property between the former spouses. Although most transfers of marital property between former spouses are generally non-taxable, there are some important tax issues that should be understood at the outset in order to avoid any unexpected tax consequences.
To begin with, one must be cognizant of the tax basis in the property received by the former spouse. Knowing one’s tax basis affects the amount of gain or loss that will be required to be reported when the property received is eventually sold. In addition, some transferred property, such as the principal home, qualifies for gain exclusion up to a certain threshold amount when the residence is sold. The transfer of … Keep reading
April 15th is just around the corner and the IRS and the DOR are on my mind. A very clever tax lawyer colleague of mine, Jennifer Green, has written a good analysis of the tax issues which apply to divorcing couples.
DIVORCE AND TAXES
Although you had hoped that your marriage would last an eternity, you find yourself in the midst of a divorce. With all the emotions that you are experiencing, you may not be paying too much attention to the tax ramifications that result from a divorce. In addition to you, your spouse and your children, there is another interested party in your divorce, namely, the IRS. To avoid unexpected tax consequences on April 15, you should consider careful tax planning as part of your divorce. A few items of interest are described below: … Keep reading
April 15th is coming up fast. If you are divorcing, or if you are divorced, your taxes will be different and you will have a number of new items to consider. I just came across a good article by Carley Mealey at the Brisbane Consulting Group.
Taxes are among the items you will need to consider when drafting a divorce agreement. You need to think about how to divide any pending refund or liabilities, and how you are going to file for the current or prior year if you are still able to file jointly.
Another consideration should be how to handle any refunds (not so likely) or taxes and penalties that may occur for prior tax years when you filed jointly. Remember the divorce agreement can make one of you responsible but the IRS generally simply goes after the easier target.
And finally, someone sent me this article and I found it so fascinating I had to pass it on.
Divorce and taxes aren’t quite as inevitable as “death and taxes,” but with one out of three marriages ending in divorce it is close. One of the blogs I subscribe to is called taxgirl and I just read a very good article there on divorce and taxes.
One thing to remember if you are part of a single-sex, married couple is that this does not apply to you as DOMA precludes the IRS as treating you as married.