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Divorce and taxes

On Behalf of | Jan 9, 2023 | Divorce

Divorce involves both parties seeking agreements associated with the termination of their marriage. Sometimes, pressing problems in the relationship may divert focus away from other aspects that require consideration during divorce proceedings. Matters related to taxation could be among them. Both spouses may need to review the tax implications of divorce proceedings in Texas.

Taxation and divorce

Not every consideration involves complicated responsibilities. Choosing the appropriate filing status for the final tax return appears straightforward. The parties may choose to file jointly or opt for filing separate returns. Some may even amend previous returns to change the filing status from joint to separate. Ultimately, each spouse must choose the legally and fiscally appropriate designation.

Spouses should remember that they are equally responsible for debt incurred on joint returns. Although one spouse may have had very little income, the IRS could go after that spouse if the other party does not pay taxes due. Therefore, it could be advisable for spouses to negotiate who pays what debt. Such debt may extend beyond taxes owed and include credit card obligations and more.

Further tax issues

Tax laws are subject to change, and one such alteration involved the treatment of alimony. Making assumptions about debt based on previous years’ statutes could be disastrous. Divorcing couples may wish to review any changes in a law that could affect their divorce and tax responsibilities.

Other tax-related matters could involve property transfers and decisions about retirement accounts. Working through disagreements might be a critical responsibility of both spouses since doing so may lead to an amicable divorce and an effective way of dealing with tax obligations.