When making decisions about your Dissolution, it is important to consider the ramifications of how that affects your tax situation because your decisions will have lasting financial implications. You might remember that:
- While Alimony/Maintenance was deductible to the person paying it and taxed to the person receiving it, this will no longer be the case after January 1, 2019 .
- The transfer of assets pursuant to a Dissolution of Marriage is not generally a taxable event if you follow the IRS rules. However, in dividing the assets, you may want to consider which of your assets are composed of after-tax dollars, such as the equity in your home or the cash in your checking account, and which assets are composed of pre-tax dollars, such as your retirement accounts. Use caution when you are calculating the worth of your marital estate and division of those assets to make certain that the division is fair to both parties.
- Beginning January 1, 2018, dependency exemptions have been repealed and eliminated. Now effective is the child tax credit, which is a credit that offsets the taxes you owe dollar for dollar and is available if (a) you have a child younger than age 17 at the end of the year, and (b) that child lived with you for at least one-half of the year. Unless you and the other parent agree and file Tax Form 8332, you can only claim the child tax credit if you claim the child as a dependent.