When people decide to pursue a California divorce, they are basically dissolving what the law sees as a legal entity when they divide their marital estate. This process of dissolution can be complicated, and one of the problems that can commonly arise for both parties after they think that the process is complete involves unforeseen tax consequences. Anyone who is about to go through this dissolution process should seek the help of experienced San Diego divorce attorneys as soon as possible, and below is a brief overview of this issue.
Joint vs. Separate Tax Returns
One common tax issue that arises in relation to a California divorce is whether the parties should file a joint tax return or separate tax returns. Generally, if people are still legally married on the last day of the tax year, they have the option of filing a joint return. Many times, filing a joint return will result in a better tax result for both parties, but this is not always the case. Before this decision is made, a close look should be taken at the financial picture of the parties involved so that unexpected tax payments do not suddenly become due.
If one spouse is ordered by the court to pay support to the other, the party that’s receiving this support needs to understand that this is generally recorded as taxable income. Those who do not prepare for this reality properly often find themselves surprised that they owe tax on those payments, and there are situations where the amount of the tax due can be difficult to pay given the lack of preparation.
Child Tax Credits
There are many different consequences that play out when the court makes a decision regarding child custody when it’s contested. Many of these consequences are obvious, but one that is often overlooked involves the parents’ tax returns. Specifically, only the custodial parent can claim the child tax credit, and there have been many situations in the past where both parents attempted to claim this benefit for the same child or children.
How San Diego Divorce Lawyers Can Help
Clearly, taxes are a complicated issue, as is divorce. Before leaping forward without understanding the potential consequences and results, those who are contemplating the end of their marriage should seek the input and advice of experienced San Diego divorce lawyers as soon as possible. Contact the Men’s Legal Center today to schedule an initial consultation.