Are you going through or about to go through a divorce? While many concerns likely weigh on your mind right now, financial matters are often high on the list. Can you get help with specific financial concerns? In fact, a certified public accountant (CPA) could be a valuable resource right now. How? Here are five common tax-related challenges they can help with.
1. Completing Current Taxes
In general, your income taxes must be up-to-date when filing for divorce. Are yours? If not, an accountant will assist you in completing this unwanted obligation. Anyone involved in an acrimonious divorce can also benefit from having an accountant act as a buffer and go-between for the couple.
2. Verifying Old Taxes
Did your spouse handle the actual filing of your marital income tax forms? Many couples have this arrangement when filing jointly, but it means that one partner may not know much about the forms they've signed. They may also need to know they can have confidence that no fraud was committed. Bring your old tax forms to an accountant to get that reassurance.
3. Analyzing Asset Transfers
Will your divorce involve the division of marital assets? Then you need to understand how income taxes affect each asset. For example, capital gains taxes on the future sale of investments are tied to each taxpayer's tax rate. In the future, both spouses may have different tax rates. So if you fail to account for taxation, you may find that your share of transferred assets is more or less valuable in actuality.
4. Completing Transitional Taxes
Will you file your current year's (or next year's) income taxes jointly with your spouse? Could this benefit both of you? Should you opt for separate tax filing instead? What about claiming certain credits, deductions, or dependents? Get answers to all these questions about your current and immediate future taxation.
5. Planning Your Future
Once you finalize your divorce, how will your personal income tax situation change? Many divorcees find their income taxes go up, although some might actually do better without their spouse on their return. You may need to strategize the sale of transferred assets, account for alimony or other payments, or understand how shared custody will affect taxes in future years.
Where to Start
Could you use the assistance of an accountant with any of these tax issues that commonly happen during a divorce? Start by meeting with an experienced CPA in your state today to find out.