New Jersey Divorce Taxation Lawyers
Taxes intersect in many ways during divorce, frequently resulting in negative tax implications for one or both spouses. High-net-worth couples face an exhaustive list of tax implications to consider, which can often significantly affect the settlement agreement. Understanding how taxes affect the outcome of your divorce is necessary to make informed decisions during proceedings. Our experienced divorce lawyers at Zeigler Law Group, LLC have extensive knowledge and specialized training in New Jersey tax law and the varied implications affecting divorce.
Will My Tax Filing Status Change After Divorce in New Jersey?
Your filing status may change if you previously filed joint tax returns. Following divorce, you will likely file as single or head of household, depending on your circumstances. Changing your filing status can impact potential tax liabilities and eligibility for certain credits and deductions.
Will Selling Assets During Divorce Impact Taxes in New Jersey?
Sales from assets outlined in divorce settlement agreements can trigger taxable capital gains or losses, depending on the type of asset, holding period, and applicable exemptions or exclusions. If you anticipate the need to sell assets during divorce proceedings, it is wise to consult an experienced New Jersey divorce lawyer with extensive tax law knowledge to anticipate capital gains tax implications and offer potential strategies to mitigate liability.
Is Alimony Taxable in New Jersey?
Previously, the paying spouse could deduct alimony payments from their taxes, and the receiving spouse was required to report payments as taxable income. Federal tax changes in 2019 eliminated alimony as neither tax-deductible nor reportable income. These changes benefit the payee with non-reportable income but can increase the payor’s overall tax liability, often affecting alimony negotiations during high-asset divorces. Alimony derived entirely or partially from business income may be considered taxable income for the payee and deductions for the payor. Increasing payment amounts may be another solution to offset tax liability.
Who Claims Child Dependents After Divorce?
The custodial parent with whom children reside most of the year can claim them as dependents on their tax return. The other parent cannot. There are diverse ways of handling dependency during divorce, however. Parents can share claiming dependence if they choose to alternate years of custodial parentage or make other dependency exemption arrangements regarding dependency in the settlement agreement.
Can I Deduct Child Support Payments?
Child support payments are not taxable in New Jersey, though dependency may affect your income taxes. Whichever spouse serves as the custodial parent can claim dependent benefits, such as tax credits and deductions. Settlement agreements in high-asset divorces often include provisions for children’s healthcare expenses, such as medical bills and health insurance premiums, which often result in tax implications for either or both parents.
Can I Deduct Legal Fees for Divorce in New Jersey?
Depending on the circumstances, you may be able to deduct legal fees for obtaining alimony or tax advice, but legal fees related to divorce or child custody arrangements are not tax-deductible.
Do I Need to Amend My Tax Return After Divorce?
If your divorce finalizes after you file taxes, you may need to amend your return to reflect your new marital status and any relevant financial arrangements from the divorce.
Are Retirement Accounts Divided During Divorce in New Jersey?
In New Jersey, retirement accounts, including 401(k)s, IRAs, and pension plans, are considered marital property and are subject to division during divorce, regardless of ownership. To avoid potential early withdrawal penalties and immediate tax consequences, you may obtain a qualified domestic relations order (QDRO) to transfer or roll over certain types of accounts.
Tax implications in high-asset divorces are significant and complex. High-net-worth individuals need an experienced lawyer with a comprehensive understanding and specialized tax law training to ensure a fair and equitable distribution during divorce. Sonya K. Zeigler, Esq. holds a Master of Laws (LL.M.) in Taxation, specialized legal tax training for licensed attorneys, and 25 years of experience handling high-asset divorces. She is an invaluable ally and dedicated advocate to protect your interests and assets.
The New Jersey Divorce Taxation Lawyers at Zeigler Law Group, LLC Help Clients Mitigate Tax Consequences During Divorce
Divorce can have significant tax implications that need addressing, particularly for high-net-worth individuals. The experienced New Jersey divorce taxation lawyers at Zeigler Law Group, LLC offer exceptional guidance and advice to protect your assets and mitigate tax consequences. Call today at 732-361-4827 or contact us online to schedule a free consultation. Located in Toms River, Red Bank, Princeton, and Mount Laurel, New Jersey, we serve clients in Ocean County, Monmouth County, Mercer County, and Burlington County.