The process of going through a divorce is both time-consuming and often stressful because it will generally have long-term, even life-long implications. When going through the division of assets and liabilities, it is important to consider the role that taxes play. If you are going through a divorce, it is helpful to speak with a local Iowa divorce lawyer familiar with the role taxes will play in your divorce like those from Simpson Legal Group.
Most Common Tax Issues in Divorce
When it comes to divorce, the two most relevant issues concerning taxes are tax returns and property taxes. Liabilities or even credits in these areas must be carefully addressed during divorce proceedings to support an equitable outcome.
Joint Income Tax Returns
Often, married couples will take advantage of various tax incentives by filing jointly. While this is beneficial during a marriage, it can complicate things when it comes time for a divorce. If you filed a joint tax return with your former spouse, the following is important to know:
You are jointly AND individually responsible for any tax, interest, and penalties due for the tax year ending before the divorce,
Even if your divorce decree states that your former spouse will be responsible for any amounts due on previously filed tax returns, there will still be joint and individual liability for the tax year preceding the divorce. Should you believe that your former spouse is responsible for your tax debt, it can be possible to pursue innocent spouse relief. Iowa follows the federal IRS determination for Innocent Spouse Relief, and your divorce attorney can help direct you to needed resources to determine if you are eligible.
Divorces without property or children are the simplest to process, but if you and your former spouse own property, it is essential that your divorce address your ownership interests and any related liability. When property ownership changes due to divorce, you may need to reapply for some tax credits such as the Homestead Tax Credit or the Disabled Veteran Homestead Tax Credit. Determining how the divorce will impact your property rights and tax obligations is important to what your divorce attorney does.
Working with a Divorce Attorney Protects Your Interests
As noted by the Iowa Department of Revenue, “divorce is a life-changing event” and while “(i)t is an emotional time… it is important to make sure your interests are protected.” The state offers an outline for persons going through the process of divorce to refer to in order to learn about the tax implications of the process. However, the Iowa DOR also takes time to note that this information is something “for taxpayers to consider and discuss with their attorneys during the divorce process.”
Connect with a Divorce Lawyer from Simpson Legal Group for Help
Give us a call at 712-256-9899 or visit our site to schedule your consultation.