Individuals filing for divorce in California and throughout the U.S. should be aware that the assets they receive in the divorce might have large implications for their taxes. Some assets might provide a smaller return on investment, fewer tax credits or another financial drawback. Even seemingly “equal” assets can have hidden drawbacks, so individuals should do their research to make sure they’re getting a fair share in the divorce.
One common mistake is dividing up assets that appear to be equal on the surface but actually have major differences. For example, a divorced couple might divide up two retirement funds that seemingly have an equal balance, but one retirement fund will be taxed extensively when it’s taken out while the other will not. For this reason, it’s important for both parties to do their research so that they know exactly what they’re getting.
Both parties should also consider the tax credits they might be eligible for after the divorce. The bigger tax credits typically go to the custodial parent. Additionally, both parties should consider the tax benefits that they received while they were married. They should consider upcoming tax refunds, business losses from the previous year and other factors that might impact their taxes in the coming year.
Individuals seeking a divorce might wish to contact an attorney. A divorce attorney might help them evaluate their financial assets to ensure that they’re negotiating the best settlement possible. The attorney may also help them navigate other aspects of divorce like figuring out child custody and visitation rights. Working with an attorney might help the individual evaluate their full financial situation, make the best possible decisions for their future and ensure that the assets are divided evenly with no surprise fees or tax issues in store. An attorney may also work to negotiate the division of property and other assets.