Divorce is an important process that can have substantial effects on your legal and financial rights. Having a tax professional on your team can help you better manage the financial complexities and advocate for a favorable divorce settlement. Unfortunately, many people overlook the effect of taxes on their post-divorce financial situation. Tax professionals can help highlight potential tax issues that may arise during a divorce and protect your long-term financial interests. Our Colorado high-asset divorce attorneys can help you navigate these complex financial issues and advocate for your best interests. Contact us today at (303) 797-2900 to learn more.
What Is a Tax Professional?
Tax professionals have knowledge of the Internal Revenue Code and local and state tax laws. They may offer tax planning advice, prepare tax returns, and represent clients before tax authorities.
There are different types of tax professionals, including the following:
- Certified Public Accountants (CPAs): CPAs are licensed by state accounting boards and must pass a comprehensive exam to receive their credentials. They help prepare taxes, assist with audits, and provide financial planning support.
- Enrolled Agents (EAs): These professionals are federally licensed tax practitioners and represent taxpayers before the Internal Revenue Service.
- Tax Attorneys: Tax attorneys can represent taxpayers during audits, appeals, and other confrontations with tax authorities.
There are also other credentialed and experienced tax preparers who prepare income taxes for pay.
How Divorce Can Create Tax Challenges
Divorce can have many tax implications. During property division, you and your spouse can reach an agreement regarding how to divide your marital property. However, there may be tax implications for various divisions. For example, you may owe taxes if you sell real estate, cash out stocks, or divide retirement accounts. An experienced tax attorney can give you advice about how to minimize taxes, as well as advise you of the various tax implications you could be facing.
Many divorcing people fail to consider the tax effect. If the goal is to have an equal property division, you should be considering the net effect of suggestions. For example, if you will be getting an asset worth $100,000, but you will need to pay $10,000 in taxes, the value of that asset should be $90,000.
Tax implications can also arise when making child support and spousal support agreements. Additionally, your marital settlement agreement may indicate which parent has child custody and will be able to claim the child on future tax returns.
Where Tax Professionals Fit In
Tax professionals can review settlement proposals and assess the impact they have on your taxes. They can explain these effects to your attorney and you. They can also offer tax-efficient asset division advice. They can also help calculate tax implications of spousal support and child-related expenses.
How Can Collaborating with Attorneys and Financial Planners Be Beneficial?
Experienced divorce attorneys in Boulder often work alongside tax professionals. A team-based approach means that you benefit from the collective experience of each specialist on your team.
Post-Divorce Tax Planning
Tax professionals can also help with post-divorce tax planning. They can assist you with making changes to your tax filing status, managing carryover losses, updating retirement accounts, and identifying new tax credits you may be able to claim. With this assistance, you can plan for next tax season and a new financial situation.
When Should I Actually Involve a Tax Professional?
While you always have the option to add a tax professional to your divorce team, it’s critical that you hire one if the IRS says you owe money, your spouse may have been involved in financial activity you weren’t aware of, or you believe your spouse is hiding assets.
Contact Stahly Miner LLC to Discuss Your Situation Today
An experienced divorce attorney at Stahly Mehrtens Miner LLC can help you identify the right tax professional to assist with divorce-related matters. Call us today at (303) 797-2900 to discuss your particular situation.