The end of a marriage can be devastating even under the most positive circumstances. Connecticut couples who are going through a divorce can face a number of challenges, one of which can include finances. But there are certain tax strategies that can make the going easier and reaching a settlement less stressful, especially when the process is handled more like a business deal in many respects.
With many tax changes instilled by the federal government in 2019, the financial aspects of divorce have become even more complicated. These changes left many owing more than they initially expected they would owe. One of the pieces of advice experts are suggesting is that those who pay spousal support deposit those funds into a trust account for the payee. Changes that have come into effect mean that those paying support cannot deduct the amount as a business expense, while the payee doesn’t need to claim the support as income. This change has made it difficult for some payors financially and trusts may help to offset the financial outlay.
Other ways to recoup finances is to sell the matrimonial home and to negotiate the value of dependent children. Under the new rules, the $4,050 exemption for each dependent child was axed, but the tax credit for each child was increased from $1,000 to $2,000. When an individual earns $200,000, the credit begins to be phased out and disappears entirely at $240,000. This fact can be used during divorce settlement talks.
An experienced Connecticut divorce lawyer will know the in’s and out’s of these new regulations and can advise and guide his or her clients accordingly. Issues tied to the divorce process can be confusing and complicated — like those concerning taxes. An attorney can clarify those areas for his or her clients which may make it less complicated coming to a settlement.