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Important tax considerations for your high-asset divorce

On Behalf of | Oct 14, 2022 | Divorce

If you are going through a high-asset divorce in Indiana, you know the process is complex. You have many major decisions to make on things such as spousal maintenance, child support, retirement accounts and business or property division.

With everything that is involved in the process, it can be easy to overlook the tax implications of your decisions. The reality is that many of your choices may have significant tax consequences, and this is something you should be aware of when you are negotiating your divorce settlement.

Spousal Maintenance and child support

Indiana is not an alimony state and there are no longer tax consequences or benefits for this type of settlement in a divorce.  What does this mean for you?  This is an important topic to discuss with your attorney to determine if you are eligible to receive spousal maintenance or if you could be required to pay spousal maintenance.

Child support is not a taxable event.  The payor of child support cannot deduct the payments for tax purposes. Likewise, any child support received by a parent does not need to be reported as income.

IRA and other Retirement Plans

These plans are subject to being divided in a divorce.  You should not take it upon yourself to handle these transfers on your own.  Your attorney will have specialized methods of transferring these assets to avoid immediate tax consequences.  You should discuss these issues with an experienced family law attorney in order to save yourself possible taxes and penalties.

Health insurance coverage

One of your biggest worries during your divorce might be losing your health care coverage. The law requires you to maintain health coverage every month of the year.

A divorce is considered a qualifying life event that allows you to sign up for insurance through the Health Insurance Marketplace. Just remember to provide updates every time you experience another change in circumstance, such as a name or address change, or if you receive premium tax credits.

These are just a few things to think about in terms of taxes and your divorce. Your situation is unlike anyone else’s, so having professional advice tailored to you is essential.