Tax Matters in Oregon Divorce Mediation
Matthew understands the tax implications of child support, spousal support, allocating dependency exemptions, selling your home, refinancing your home, selling investments, cashing in your retirement accounts, dividing or rolling over your retirement accounts, and all other aspects of how taxes affect the decisions you make in your divorce. Matthew's knowledge of state and federal tax law will inform you so that your decisions are made with broader awareness.
Child support has no tax consequences. It is not deductible by the payer. It is not taxable to the recipient.
For divorces finalized on or before December 31, 2018, and not modified since then, spousal support is typically taxable to the recipient and deductible by the person who pays spousal support. However, since January 1, 2019, spousal support is not tax-deductible for the payer and is not taxable income for the recipient.
Dependency exemption is the term for the deduction you may take on your tax returns for providing the care for a child. Matthew will explain how the exemptions work by default and how you can use exceptions to your advantage to ensure that both spouses are maximizing the benefits of the tax laws. There is nothing wrong with trying to reduce your tax bill to the lowest it can legally be. During divorce, when things are tight financially, finding ways not to waste money is important.
Real estate tax issues are also potentially important to you in a divorce. Whether to put money into your home, sell your home, or buy a new home or rental may depend on the tax consequences of each possible choice. What, if any, capital gains tax will you pay if you sell your house? Is it wise to sell the house now or wait until later? If one spouse buys the other out of the equity in the house, will that person face potential tax consequences down the road if the house increases in value? Will there be any tax pitfalls of converting a primary residence to a rental property, or vice-versa? Are there any tax advantages or disadvantages with respect to refinancing a house? Matthew will help you with the answers to all of those questions and others.
Non-retirement investments have varying tax implications. What one is worth on paper may be very different once you factor in the tax consequences of keeping it, transferring it, or selling it. The value of different investments today, to compare them to other items in your marital property division, may vary based on how much you must pay in taxes whenever you do sell them (even if it is long after the divorce). It may also affect your personal income taxes.
Retirement accounts are taxed differently depending on the type of account. For example, accounts such as 401(k), 403(b), SEP, and traditional IRA accounts are taxed differently from Roth IRAs. With very few exceptions, if done correctly, retirement accounts can be transferred (partially or completely) from one spouse to another upon divorce with no tax consequences or penalties.
Child support has no tax consequences. It is not deductible by the payer. It is not taxable to the recipient.
For divorces finalized on or before December 31, 2018, and not modified since then, spousal support is typically taxable to the recipient and deductible by the person who pays spousal support. However, since January 1, 2019, spousal support is not tax-deductible for the payer and is not taxable income for the recipient.
Dependency exemption is the term for the deduction you may take on your tax returns for providing the care for a child. Matthew will explain how the exemptions work by default and how you can use exceptions to your advantage to ensure that both spouses are maximizing the benefits of the tax laws. There is nothing wrong with trying to reduce your tax bill to the lowest it can legally be. During divorce, when things are tight financially, finding ways not to waste money is important.
Real estate tax issues are also potentially important to you in a divorce. Whether to put money into your home, sell your home, or buy a new home or rental may depend on the tax consequences of each possible choice. What, if any, capital gains tax will you pay if you sell your house? Is it wise to sell the house now or wait until later? If one spouse buys the other out of the equity in the house, will that person face potential tax consequences down the road if the house increases in value? Will there be any tax pitfalls of converting a primary residence to a rental property, or vice-versa? Are there any tax advantages or disadvantages with respect to refinancing a house? Matthew will help you with the answers to all of those questions and others.
Non-retirement investments have varying tax implications. What one is worth on paper may be very different once you factor in the tax consequences of keeping it, transferring it, or selling it. The value of different investments today, to compare them to other items in your marital property division, may vary based on how much you must pay in taxes whenever you do sell them (even if it is long after the divorce). It may also affect your personal income taxes.
Retirement accounts are taxed differently depending on the type of account. For example, accounts such as 401(k), 403(b), SEP, and traditional IRA accounts are taxed differently from Roth IRAs. With very few exceptions, if done correctly, retirement accounts can be transferred (partially or completely) from one spouse to another upon divorce with no tax consequences or penalties.