4 Questions You Should Ask an Accountant When Filing for Divorce
Going through a divorce is a difficult time. Nobody is denying that. At the same time, there are some practical and logistical questions that must be answered before the process is finalized.
It is best to seek out professional advice and counsel to make sure that you are well protected in the end, both financially and emotionally.
With that in mind, consider the following four questions that you will want to ask an accountant as you begin the process of filing for a divorce.
Who Maintains Head of Household Filing Status?
While it is true that filing as the head of the household holds certain tax advantages, you must make sure that you qualify.
In a divorce, the tax law is quite clear. The parent who spends the majority of the time with the children will likely retain head of household status.
However, the situation becomes murky if both parents split custody 50/50. This is why you will want to consult with your accountant.
What about Capital Gains Tax?
Many divorces will involve the sale of a property that is jointly owned. Depending on the situation, they may be some capital gains tax to take into consideration. It will depend on when it was purchased and how the property was used.
When you want to buy property, there are a lot of factors that go into it. Your accountant can help advise about the tax implications of a possible sale prior to the divorce being finalized.
Should I Opt for Family Support or Spousal and Child Support?
You will want to keep in mind that family support has certain tax implications.
This is why accountants will typically recommend that support be divided into either spousal or child support.
Talk to your professional accountant and see which is most appropriate and beneficial given your particular situation.
How Do I Cash out My Retirement?
It is quite common for one spouse to want to use their own retirement account in order to buy out the other spouse from a different marital asset.
You will want to speak to an accountant before doing so. There are certain tax issues that need to be taken into account when cashing out your retirement too early, so you will want to keep that in mind.
These four questions are important, and they are complex enough to warrant getting an accountant involved.
In order to avoid any potential negative consequences down the road, it is best to handle these correctly from the beginning.
Once the divorce is finalized, you will be in a much better financial position moving forward as a result.
Category: Family Finances
