Yuma, AZ – Divorces almost always have some kind of serious financial consequences. Aside from property division, child support, alimony, and other financial issues, taxes can also seriously affect a person’s financial situation. For these reasons, it is imperative that anyone who has recently separated speak with an attorney or tax professional to determine how their separation will also affect their taxes. Many of these rules are not intuitive, and it can be extremely difficult to figure out how to file taxes after a divorce without some kind of professional help.
Married couples file their taxes jointly, while a divorced person will start to file as a single person again after the divorce has been finalized. This will result in a much different total income, and it can also affect certain other aspects of the filing process. When spouses file a joint tax return, they do not need to worry about community property issues.
Loss of various deductions and credits
Tax laws tend to be more favorable to those who are married. This means that a single person will likely end up losing certain credits and deductions, which can result in a larger tax burden. The couple also needs to both choose to file either itemized or standard deductions as part of their separate returns for Arizona state tax purposes.
Property and investment transfers
There are certain types of property transfers that must occur within a short time after the divorce to avoid heavy taxes. Aside from real property, this can also include various kinds of investments and assets such as retirement accounts. This may become one of the more complex aspects of a divorce, especially for couples with significant amounts of their wealth tied into various assets and investments.
Community and separate property issues
Because Arizona uses a community property system for divorce, a spouse should be aware of the difference between when their property is considered a separate asset for Arizona income tax purposes. Generally, if the spouse owned the item before marriage, or it was received through inheritance or as a gift, it will be considered separate property for tax purposes.
The state tax situation for any divorced person can change based on their state of residency, or if they have recently moved. Some people who do not reside in Arizona may still have assets that are physically present in the state, and this requires any income to be reported.
Divorce lawyers in Arizona
Schneider and Onofry is a firm in Yuma that handles all kinds of family law issues. Their attorneys are available for consultations with local clients to discuss issues such as divorce, child custody, and support payments.
Firm contact info:
207 W. 2nd St., Yuma AZ 85364