Dividing debt and property can be a major financial task during the process of dissolving a marriage. After all, both one's debt and one's assets have a huge impact on one's life going forward. However, there is another hurdle to overcome during the divorce process in Illinois: tax implications.
People going through divorce often overlook the tax implications of the decisions they make during this type of family law proceeding. For instance, after getting divorced, a person who gets a large chunk of money through property division may have to pay capital gains taxes. In addition, both parties have to change their tax filing statuses moving forward.
It is also important to consider the tax implications of family support payments, such as alimony and child support payments. Furthermore, if the two people getting divorced have a child together, just one parent can take advantage of the dependency exemption. In a majority of cases, this exemption, which can be worth a large amount of money, will go to the custodial parent.
Appropriate legal guidance may help people getting a divorce in Illinois to make informed decisions regarding how to address their marital property and debt, keeping in mind the tax consequences of the choices they make. If the two divorcing individuals can achieve a mutually beneficial and satisfactory settlement through mediation or at the negotiation table, they can avoid having to go to trial. Otherwise, litigation is necessary, during which a judge will make decisions regarding matters such as asset division for the couple.
Source: goodmenproject.com, "4 Top Money Issues In Divorce", Colin Amos, Oct. 24, 2016