The beginning of the year is sometimes referred to as “divorce season,” a time when many couples decide to end their marriages. Some may split prompted by holiday reflection, or after giving their children one last holiday season as a family.
Taxes also play a role in helping a couple to decide when to divorce. Couples may decide to save money by filing jointly for the last year of their marriage. Once the previous year is over couples may be eager to part ways and move on. But new changes to the United States Tax Code may make that more difficult in 2013.
The recent American Taxpayer Relief Act included increased tax rates on income and investments for wealthier Americans. In light of the new law, divorcing couples need to think more carefully about financial issues like alimony and property division, especially when a large amount of assets is at stake.
For example, spouses who receive alimony will see it taxed at a higher rate. It may make more sense to negotiate for real estate instead, or have the payer maintain that property instead of paying alimony. High-income spouses may also wish to give away deferred income in divorce, which could be taxed at a higher rate.
If you are considering a divorce or are currently going through the process, it is always wise to speak with someone who understands the legal, financial and emotional ramifications of divorce. Consider working with an experienced family law attorney who can get to know your unique situation and protect your interests in and out of court. He or she can work with you to pursue the best possible outcome for you and those you care about.