How to prepare for tax time during divorce
In a prior post, we presented a post on basic tax questions to ask your attorney as you prepare for divorce. With the federal income tax filing deadline just under two weeks away (April 15), we find it appropriate to revisit tax issues. A recent Forbes article highlighted some important points for potential divorcees to consider, especially women who are stay-at-home moms; even though the advice could be applicable to both men and women.
We will note some of these points here.
Get financial documents – While it may seem obvious to compile your financial documents for tax preparation purposes, it is also important to do so for divorce preparation. Having 401k statements, bank statements, monthly loan statements and credit card statements are helpful in establishing an expectation for what you may be entitled to as you divide property.
Begin to change your mentality – With preparation for divorce, you should focus your mentality on what would be in your best interests financially after divorce. After all, you are essentially starting over, and you need to be in a good financial position to do so. As such, try not to make emotional decisions over property if it does not fit into your overall financial plan.
Understand how your tax status may change – If you initiate your divorce and it is finalized in 2014, chances are that your tax status may change; especially if you acquire property (real estate or other property) that may subject you to capital gains taxes, have children residing with you full-time, or you end up paying (or receiving) spousal maintenance.
Source: Forbes.com “Six steps to financial spring cleaning for divorce,” Jeff Landers, Apr. 1, 2014