Divorce Accounting and Tax Issues

Divorce and Taxes: We Help Resolve Complex Issues During Challenging Times

Sorting out divorce and taxes is often a problem but when a divorce is involved these issues can get extremely complicated. When you’re getting a divorce and need to work out the taxes for both sides be sure to call on a professional for guidance. A mediator can help both parties come to an amicable solution that meets legal standards and benefits the interests of both sides involved.

divorce and taxesThe Tax Implications of a Divorce

A divorce changes the filing status of an individual and this must be considered before any final conclusions are made. Payments for child support and alimony will also play a new role in the family financial structure and may affect the tax situation of either party. The tax credits will need to be sorted out during the divorce negotiations and this will be determined according to the custody arrangements made for the child. Child custody decisions must be made based on the best interests of the child and not on the tax implications involved with custody.

Mediation offers a number of other benefits when it comes to divorce taxes. If one spouse comes into the negotiations with an unclear understanding of the tax regulations, he will not have the ability to really duplicate what the divorce tax issues San Jose really are. During the negotiations he will learn more about the tax implications of a divorce and how they will affect him. It’s important to provide both parties with a clear understanding what’s all involved when it comes to both current and future taxes.

Many couples turn to their attorneys for guidance during the divorce process, which may lead to disastrous results for both sides. Divorce in itself can be financially draining so you’ll want to make sure that your best interests are kept in mind as far as taxes go. While it may not seem like a prime issue at the moment with so many other things to consider such as the children and all of the possessions, the tax implications are far-reaching both now and in the future. Taxes must be addressed immediately so that neither individual ends up leaving money on the table.

We Help You Resolve Your Divorce Tax Issues

All negotiations that take place between the parties involved and the mediator are kept strictly confidential. Nobody will have access to the information and there will be no public record available. Your tax situation as it is now and in the years to come will be fully analyzed and recommendations will be offered so that each party can minimize his liabilities. At the end of the sessions you will know what your tax situation is in regards to your personal accounts, 401(k) accounts, taxable transfers, benefits arising from compensation plans etc.

During a divorce, it’s vitally important to address all of the tax implications involved. Whether you have a high income or are struggling to get by, the tax issues you handle right now may end up saving you thousands of dollars in the future.  Contact us today for a consultation.

 

Frequently Asked Questions / FAQS

 

What is divorce accounting and taxation?

In divorce cases, it is important to account for all assets and debts, and the taxes that can arise from this process.

Does the division of community assets and debts affect taxation?

In some respects, taxation is not affected. However, depending upon your specific circumstances there may be some taxable events which we cover in the process

Married Filling PapersHow can a mediation firm help in this process?

Our mediation firm is full-service, which means that we construct a detailed accounting of your community property assets and debts, and options for division which can involve potential taxation

Does the mediation firm work with client’s financial advisor and CPA?

On occasion, we work with other professionals who can help us streamline our division of assets and debts with calculated figures from tax returns.  This can involve federal and state income taxation, capital gains, property taxes, and other taxes. In most cases, we do the analysis for our clients and are happy to talk with your financial advisor and CPA.

Why is divorce accounting important?

When our firm provides a detailed divorce accounting, this gives our clients clear numbers that we can use to calculate options for division.  Without this accounting, the parties will not be able to develop an accurate division.

Does the divorce accounting involve legal issues?

Yes, often there is more than one interpretation about the ownership share of an asset. Divorce accounting can highlight these areas, which can be successfully mediated and negotiated.

Do we work with spreadsheets?

Yes. Many of our clients have their finances captured in an EXCEL or NUMBERS spreadsheet. We find that reviewing our clients’ spreadsheets can be helpful.  We also draft a text document such as WORD so that we have an annotated version of the assets and debts.

Are the mediators at our firm qualified to do divorce accounting?

Divorce Accounting

Yes, each mediator is highly trained to account for assets and debts within a community property state like California. We are also competent to account for assets and debts in an equitable division, non-community property state. This can involve real property, bank accounts, portfolio accounts, retirement accounts, rental property, separate property, RSU stock options, ESPP stock, art, offshore property, and many other types.

What if a party to the divorce does not provide necessary documents? Does this preclude a mediation firm from drafting a divorce accounting?

Sometimes it is difficult for a party to obtain some financial documents, or they are hesitant due to anxiety.  In this case, we can create estimations and statistical models for us in negotiation that usually lead to successful negotiation.

Does your mediation firm ever offer only divorce accounting services?

Yes, many of our clients are already in a divorce process with the courts, and want a neutral, third-party accounting of their assets and debts, in a way that is useful for negotiation. These clients agree to our analysis because we don’t represent either party, and are not involved in the litigation.

Does our mediation firm ever work with just one party?

Yes, all the time! We are frequently hired by just one client to give them a full accounting and analysis of their case, and to advise them on negotiation opportunities that are fair to both parties and which resolve their case

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