One of the most common assets with which we deal in a divorce, and one which has some of the most favorable tax treatments available (and at the same time one for which the tax treatments are so often misunderstood by non-tax experts), is the marital home. While as a general statement there are many unique items within our Tax Code, the marital home indeed has a special place, blessed with certain tax benefits that are simply nowhere else to be found in our Tax Code.
By Noah Rosenfarb: In general, there are four different types of tax credits that divorcing parents should understand before resolving which parent will claim the dependency exemption and/or how joint custody should be addressed in an agreement.
By Noah Rosenfarb: The Taxpayer Relief Act of 1997 created a new type of Individual Retirement Account (“IRA”) named after Senate Finance Committee Chairman, Senator William V. Roth, Jr.
There are several things to look out for when dealing with hedge funds, including the limitations on your clients’ rights to redeem shares, accredited investor status, their valuation process, tax etc.
By Noah B. Rosenfarb: When nonqualified deferred compensation plans (“NQDC”) exist in a marital estate, they are often substantial components of the marital balance sheet. If your case includes an NQDC…
By Noah Rosenfarb: In 2008, the IRS amended Section 152(e), which deals with dependency exemptions. The changes to the tax code can be summarized…
Federal tax law allows the parties to decide which parent should claim the exemption. There is no residency requirement. There is no requirement that the party claiming the exemption pay support. (These factors do figure in the head of household filing status determination, though.)
Couples commonly have wills that bequest all of their property to the surviving spouse after the death of the other. A concern may arise that, if the surviving spouse ever re-marries, all or some of the property that was intended to remain “in the family” may find its way into the hands of a stranger.
Filing as Head of Household (“HOH”) can save up to $8,000 per year over filing as Single. Therefore, it is critical to evaluate the post-divorce tax filing status for each party when negotiating a settlement. This requires thought and agreement beyond determining who will claim a child as a dependent.
Divorce can also be financially taxing and the tax consequences, if not understood, will add to that distress. Fathoming the tax aspects of divorce becomes no less critical during economic hard times.