How Divorce Lawyers in Palatine Can Help Clients with Tax Matters

by | May 8, 2024 | Lawyer

Although the Internal Revenue Service doesn’t usually consider assets transferred between soon-to-be-divorced spouses as taxable, those unaware of tax implications can lose significant assets. In this article a list of some of the most commonly taxed occurrences and items can be found, and information on how divorce lawyers in Palatine can help clients navigate the legal system.

There are numerous items to be aware of when considering a divorce’s tax implications, and failing to give heed to them may end up forcing a spouse to sell the asset in order to pay the tax on it. Such assets and life events can include:

* The family home is usually a couple’s most valuable asset. Upon a divorce, couples typically sell the home and split the money, sell at a later date, or one person buys out the other’s interest in the property.

* For couples under the age of 55, if the marital home is their principal residence, they have two years to reinvest the proceeds of a sale while avoiding capital gains taxation. Problems may arise if a spouse remains in the home for longer than two years after a divorce, and the other spouse can be hit with huge capital gains taxes when the home is sold at a later date.

* For couples over 55: as a married couple ages, the process of assets sale and monetary distribution becomes more complex. A couple over 55 qualifies for capital gains tax exclusions up to $125,000, but if they wait until after a divorce, both people can qualify for the exemption. If a home is worth over $125,000, it’s advantageous to sell after the divorce is finalized.

* Bonds, stocks, mutual funds, artwork and other items that appreciate in value: these items must be divided during a divorce. Although stocks are typically taxed upon gains over the investment period, in a divorce buyout, taxes are paid on the initial investment and the other spouse is given tax-free money.

Divorce has many tax ramifications and some of these can be very far-reaching. If a couple wants to maximize their assets and keep as much as possible after a divorce, they should call divorce lawyers in Palatine, such as those with The Law Office of Fedor Kozlov, P.C., to find out the right way to proceed.

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