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Arlington Heights divorce taxes lawyerResponding to the changes brought on by divorce is no easy matter, as they encompass nearly every aspect of a person’s life. One’s finances are heavily impacted by this process, since the resources available to each spouse will be reduced after one household is split into two. The payment of child support and alimony are further expenses that can strain a person’s budget.

Taxes is one area that is less discussed but is still vitally important to achieving a fair property settlement and understanding how one’s financial picture will look for at least the next few years. Spouses should understand the tax consequences of divorce, including how taxes apply to the division of assets and debts, as well as their post-divorce income tax liability. This issue is of particular importance, as the window to take advantage of the current tax law that allows the payor to deduct alimony payments is closing at the end of 2018.

Because some tax repercussions do not appear immediately, the real economic implications of divorce agreements and associated court orders may not be felt until the divorce has been completed. Understanding these issues can help divorcing spouses avoid being blindsided by potential tax liabilities in the future. 

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federal tax reform, Schaumburg family law attorney, spousal maintenance awards, federal tax reform law, maintenance obligationsThe implications of divorce do not end when a marriage is formally dissolved. Parents must still interact with each other as they work to share custody in a manageable fashion. Moreover, the financial adjustments required as cash flow shifts to account for new expenses and reduced income are very necessary and long lasting.

A divorced individual’s tax liability is often directly impacted by divorce but frequently receives much less attention and consideration in the settlement process than this issue deserves. How property distribution and the method of disposition is structured, as well as support paid and received by each party, can produce serious tax consequences in the short- and long- term.

Spousal maintenance, or alimony, is an area that is particularly affected by the tax rules, and changes to the federal tax reform law are primed to directly influence how divorcing couples handle this already contentious issue.

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