Divorce often deals an emotional blow, but it can also deal a financial one. This is especially true for New Jersey couples with high-value assets. A couple of tips might help those going through divorce to avoid a surprise tax hit as a result of the divorce proceeding.
First, people who are going through divorce -- but not yet finished -- are able to file taxes as single, married filing jointly or married filing singly. The proper choice often is married filing jointly. However, the option of married filing separately may make more sense for a person whose spouse has many medical expenses.
Another concern during tax time for people who have gone through the divorce process is who can claim any available child tax credit. The parent who has the child more nights -- typically known as the custodial parent -- usually gets the dependent credit. However, it is possible for both parents to trade this credit if one of them earns too much money or too little money to experience a benefit from this credit.
Even though the divorce process can be challenging to navigate in New Jersey, a family law attorney can help to complete the process in a manner that benefits them most in the long term. With an applied understanding of the law, two people might be able -- with the help of their respective lawyers -- to negotiate their divorce to achieve a settlement that reflects the equitable interests of both parties. If this is not possible, however, the couple will have to rely on a judge to make the final decisions regarding asset division and other areas of contention.
Source: nasdaq.com, "8 Ways To Make Divorce Less Taxing", Ingrid Case, June 7, 2016