Taxes can be a stressful subject for anyone. Adding a divorce into the equation can make taxes particularly trying, especially for those with a higher income level. Fortunately, experts have several suggestions for anyone here in New Jersey who may go through a high asset divorce and how they can minimize the impact on their taxes.
First, since the tax laws around alimony changed at the start of the year, the best choice for all parties may be to put alimony into a trust. With the new laws, paying alimony is more expensive than receiving it because the tax deduction for payers has now been removed. Putting the same amount of alimony into a trust allows the receiving spouse to continue to receive payments without the payer being taxed.
Next, though it may be an emotionally difficult choice, experts suggest selling a shared marital home. Sometimes, lower-earning spouses may not be able to handle the taxes on their own, especially since the deduction for property taxes has changed. New Jersey already has a higher rate of property tax, which means selling may make the most sense. Another potentially emotional factor is the tax deduction for children, which has also changed. Though child tax credits have increased, the deduction amount has shrunk, and families will want to consider this in a divorce decree.
The last tip that experts give is to try a practice tax filing, also known as pro forma. Having a professional look over one’s taxes before everything is determined can save a great deal of money in a high asset divorce. Another great resource to consult is a divorce attorney. An experienced attorney can advise those who are uncertain of all available options.