Alabama residents who are in the process of ending a marital union will want to take note of a recent article that discusses the various issues that may arise pertaining to different types of taxes. As couples negotiate the division of property and assets during the divorce process, they may have need of formulating agreements when it comes to issues involving federal tax refunds or liabilities with regard to jointly owned assets during the marriage. According to the article, seeking professional financial advice is advisable for those who wish to keep things as uncomplicated and amicable as possible.
Various tax issues can surface during divorce proceedings. The article noted that family law courts do not typically render final orders with regard to things such as income tax because the IRS is typically not bound by state court rulings. Couples are advised to come to an agreement about whether to file jointly on their tax returns; they have that option if they were still married on the final date of the tax year. The article also advised spouses to take into consideration any existing prenuptial or post-nuptial agreements pertaining to earnings from property as these documents may bear significance on how property assets are separated and divided.
Another cautionary note stated that couples should be aware that certain assets might include tax issues that affect the value of the assets.When selling an asset, for instance, the tax basis of the item is used to project capital gain. It was also suggested that couples should be aware of whether taxes have already been paid on assets or whether tax payments have been deferred to a later time. In addition to these issues, claiming children as dependents is another significant topic that must be addressed; typically, the custodial parent is entitled to claim the exemption.
Insofar as child support payments are concerned, child support is not tax deductible for the parent who is paying but is also not taxable to the parent who is receiving the payment. Alabama residents who are concerned about issues pertaining to taxes and/or division of property and assets in a divorce will want to make sure that they are informed as to state and federal laws that might affect their circumstances. Seeking consultation with a family law professional would most likely prove beneficial to those involved.
Source: texaslawyer.com, "How to Effectively Handle Tax Issues in Family Law", Jonathan J. Bates, April 30, 2015