Questions to ask your Divorce Attorney

Are there income tax issues that arise during a divorce that you should talk to your accountant about ?
1) If both you and your spouse signed a joint income tax return, either of you could individually end up paying for the entire amount of any income tax liability.

2) If your spouse is self-employed, and you are not involved in the management or operation of the business, you should talk to your accountant about the Innocent Spouse rules.

3) If you are having trouble securing past joint tax returns, you may get them directly from the IRS by completing Internal Revenue Service Form 4506. (IRS.GOV)

4) If you are moving from the marital home, you can use Form 8822 to notify the IRS of your new address.

5) Alimony is deductible from the income of the spouse paying the support and taxable to the recipient spouse, but only if all the require­ments of IRC Section 71 are met.

6) Child support payments are not deductible from the income of the paying spouse or taxable to the recipient spouse.

7) The IRS considers the parent who has the care of the children for 183 or more overnights each year to be the “custodial” parent and to therefore receive entitlements such as dependency exemptions. You and your spouse may agree for the “non-custodial” spouse to claim the dependency exemption. In that case, you will use IRS form 8332.

8) Generally, transfer of property under a divorce action is not a taxable event.

9) Generally, the spouse who receives an asset will be responsible for tax on the appreciation once the asset is sold by the spouse receiving that asset through the divorce.

10) Generally, fees incurred for the production of income, such as obtaining spousal support or alimony, are deductible under the IRC Section 2121. Fees incurred defending against paying alimony are not deductible. If your spouse pays your fees, you may not take the deduction.

11) The spouse who provides more than half the costs of a home in which the spouse resides, and where the child resides at least 183 overnights each year is the Head of Household.

Will there be health insurance coverage after divorce?
1) A spouse may sometimes be ordered by the court to keep the children on his or her policy.

2) A spouse may not continue to cover a former spouse on a health insurance policy following divorce.

3) Most health insurance plans offer a conversion package to individual coverage under COBRA, a federal law.

Do retirement plans need to be divided by QDROs?
1) Federal law governs most retirement plans. Most retirement plans receive special tax treatment, allowing contributions to the plan to go in before taxes are paid, and further allowing the income on the plan funds to accumulate without current tax.

2) Upon divorce, a special order, called a “Qualified Domestic Relations Order” (QDRO) must be issued by the court and served upon the plan’s trustee.

3) The QDRO defines how much of each payment is to go to each spouse.

What is a Prenuptial or Premarital agreement?
1) A prenuptial or premarital agreement is a legal contract between two people who are about to be married. In the agreement, the prospective husband and wife may agree upon the rights that each will have to the property that they bring into the marriage, and/or acquire during the marriage. They may also agree as to the amount of support owed to the other in the event of divorce.

2) A post marital agreement is a similar contract between a husband and wife after they are married. This agreement may alter the rules for the division of property between the spouses in the event of divorce or death. A particular form of post marital agreement, often referred to as a Marital Settlement Agreement, specifies the distribution of property and responsibility for debt between the respective spouses as part of the divorce proceeding.

When can child support be modified?
1) An order for child support can be changed or modified any time there is a “material change in circumstances” from the time that the existing child support was issued.

2) A material change in circumstances can take many forms. The change can be the result of changes in the parent’s financial situation – such as appreciable difference in the amount of income earned, loss of a job, a large inheritance, or a change in the amount of time spent with the child. The material change in circumstance can be the result of a new situation for the child – such as large medical expenses, need for special education, or other unexpected requirements.

3) A child support payment could be modified by stipulation between the parents (as long as guideline support factors have been accounted for) or by a noticed court hearing.

How is a Parenting Plan established?
1) This is the ideal situation.

2) Absent extenuating circumstances (such as abuse or neglect), the parenting plan agreed upon by both parents becomes the parenting plan.

3) The agreement does not have to be reduced to a writing signed by both parents but a written, signed parenting plan is preferable for future enforcement.