West Virginia couples who are going through a divorce might find that their tax obligations change. Some of them may be permanent, such as filing as single instead of married. The person’s status on the last day of the year determines the filing status.
Some taxes, such as those related to the sale of property, may be one-time but can vary depending on certain factors. For example, if the couple sells a home, they may be at a tax advantage if they are still married. Therefore, they might try to do so before the divorce is final. They may want to look into how taxes would be affected by the selling or splitting of other assets as well. For some retirement accounts, they will need a form called a qualified domestic relations order that allows them to avoid a taxable event. This is not necessary for an IRA, but people may want to look into how they could avoid a penalty for early withdrawal.
The Tax Cuts and Jobs Act has changed people’s ability to take some deductions. There is no longer a federal deduction for alimony, and the dependent exemption has been removed. However, some states allow alimony deductions. States also may have rules about dividing certain types of assets, so it is important to be familiar with state laws.
A divorce does not automatically mean a court appearance. Couples who are ending their marriages might be able to reach an agreement through negotiation instead of having to go through litigation, which can be expensive, stressful and time-consuming. However, there are situations in which going to court might be unavoidable. One person might believe the other person is hiding assets, or a parent might be concerned that their child is unsafe with the other parent.