Government programs rolled out during the coronavirus pandemic may impact the divorce process for some individuals.
During the pandemic, the federal government provided financial assistance to businesses and individuals/families. As a business owner, you may have received a loan from the Paycheck Protection Program. As a taxpayer, you may have received stimulus checks. As a student loan debtor, you may have received a deferral from making your monthly payments. These and other government programs may affect your taxes, child support calculations, and division of liabilities during your divorce process in 2021. This article describes some of these programs and what to consider.
As the divorce process proceeds, you will be presented with options and action items. It is important to consider the tax costs/savings that result from such choices: from splitting financial accounts to claiming child tax credits. A certified divorce financial analyst could preview your options and provide guidance. This article describes some situations which may impact your taxes.
Before 2019, the payor deducted alimony on a federal tax return and the recipient paid taxes on it. Today, alimony is non-deductible and non-taxable in the manner of child support. However, there are strategies that can be used to minimize taxes while negotiating a settlement. For high net worth couples, these strategies include transferring retirement and taxable assets that will produce the income equivalent to the proposed alimony.
This article provides more details on these and other strategies which should be reviewed with a certified divorce financial analyst.
By now, we have all heard bits and pieces of the sweeping tax plan proposed by Republican lawmakers. Interestingly, there is a significant provision that will affect divorcing couples. Whereas current tax law allows the payor spouse to deduct alimony payments and requires the payee spouse to pay taxes on alimony received, the proposed tax plan would eliminate the deduction to the payor and the taxability to the payee. In effect, the payor spouse would pay alimony with after-tax dollars. This provision would raise tax revenue in order to pay for other tax cuts. If the tax plan passes as proposed, the repeal of deduction for alimony payments would be effective for any divorce decree or separation agreement executed after 2017. This article provides examples of the effect on a divorcing couple.
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Spring and summer are popular seasons for weddings so many of us will be celebrating in the near future. By now, the engaged couple has learned a lot about each other- where they grew up and went to school, who the important people are in their lives, what their hopes are for the future, etc. All of these facts are important but knowing each other’s financial past and present should also be a top priority as described in this article. Openly discussing topics, such as debt, taxes, and prior marriages, will lay a foundation for mutual understanding of individual and joint financial goals.
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Samalin Divorce Finance helps clients analyze their options.