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Divorce and Your Money - #1 Divorce Podcast

Visit us at www.DivorceAndYourMoney.com Divorce and Your Money is your guide to avoiding costly mistakes during divorce. Shawn Leamon, Certified Divorce Financial Analyst and MBA, wants to help you learn the fundamentals of how to get a divorce. Whether you are looking for an uncontested divorce, a do it yourself divorce, or an online divorce, resources are available to offer guidance. Through his divorce podcast and divorce blog, Shawn offers his professional opinion on the best ways to handle the end of your marriage. He covers topics including how to file for divorce, divorcing a narcissist, and finding the best divorce attorney. Even tricky subjects such as a “what is a QDRO?” and “is alimony taxable?” are tackled through these venues. If you need to know what the first steps are or what you should do to head to trial during litigation, you can find resources to give you a step-by-step guide to what comes next. Think of his advice as an alternative to divorce support groups where you can find exactly what you need when you need it. He offers one-on-one divorce coaching to give you a solid grasp on the decisions that are bound to affect your financial future. Before you have a divorce decree in hand, you will likely go through some type of divorce mediation. For any spouse saying, “I want a divorce,” you need to make sure that you are getting the financial future you are entitled to. Do not allow yourself to be blinded by the emotional, legal, and financial burden that divorce can become. Instead, take control of your situation with sage wisdom to help all individuals make better financial decisions for their independent future. If you find yourself asking “where are the best divorce lawyers near me?”, Shawn can help you to recognize the best of the best. Whether you need a divorce in Texas, a divorce in Florida, or a divorce in New York, you will have all the knowledge you need to find the best team of professionals to assist you. You can start from a place of being legally separated or once you have already started to file for divorce using free divorce papers or an attorney. No matter where you or your marriage may be in the process, Shawn Leamon has professional advice to offer your unique situation. A simple no fault divorce or a high-stakes power struggle are all areas he has vast experience with during his work outside of Divorce and Your Money. Let his advice be a guide to help you get all that you need for a secure financial future in your divorce records. It will not make a difference whether you are getting a divorce in Ohio or a divorce in California if you are following the basic principles set out through Divorce and Your Money’s divorce blog, divorce podcast, and divorce coaching.
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Aug 5, 2019

Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help. Learn about coaching services here.

 

As anyone who listens to the show regularly knows, there's a lot of different moving parts to be thinking about as you go through the divorce process. Sometimes there are some things that are less obvious that you may want to consider as you are filing for divorce, living your life and just doing some of the normal financial things that you should be doing. One of the questions that comes up, only on occasion, but it's a very important question when it does arise is while you're going through the divorce process, is it better to file your taxes as married filing jointly or married filing separately? While you are still married, you have those two options as a status to elect when you file your taxes. It can be an important question. I'll get into the reasons some of you might consider filing separately in a moment.

 

But historically, most couples file married filing jointly for as long as they can. What that means is that you file one tax return for the two of you and both of you are supposed to sign it independently. The reason you filed jointly as one tax return is for two main reasons. One is that you get the maximum amount of deductions as part of your tax return, meaning, in general, you pay less in taxes at the end of the year. The second reason is it's much simpler for couples usually just to have one single tax return. It means you're only paying one accountant to prepare one return instead of maybe two accountants to prepare two returns or whatever the case may be. You’re probably accustomed to using married filing jointly, but when the divorce process arises or if you're thinking about separation, there are times where it makes a lot of sense to file your taxes as married filing separately.

 

I'm going to go through quickly some reasons to do this. At the end of the day, ultimately everyone's situation is different. The best way to figure out how you should file your taxes is to work with an accountant to figure out what exactly makes the most sense given your specific situations, but let's think about... And you should always be aware of your options in the divorce process even if you don't ultimately choose it. So why might someone choose married filing separately? Well, there's actually a scenario. The first thing is that you could actually save on taxes if you are filing married filing separately. If you're filing separately, I'll just say to simplify the phrase. If you're the person in the relationship who has a lower a set of income or no income at all, you might end up saving actually overall on your tax bill. And conversely, if you're the higher income earner and you file separately, then you're likely going to have a much higher tax bill than if you filed jointly. That's just the way the tax rules are written. That's the first thing to be aware of.

 

The second is something that comes up very frequently, particularly when it comes to divorce. That is, you want to minimize your liability when it comes to what your spouse does on the tax return. Why might someone want to minimize their liability? Well, I speak to many scenarios where one spouse is, I'll just say, doing something suspicious or you suspect a spouse of doing something suspicious with their tax returns. It could mean... Scenarios include they could have a cash business and they're not reporting all of their income and you're worried that they may get audited and that would come back and affect you because you're under-reporting and underpaying your taxes.

 

It could mean that you just don't trust them that they're doing the right thing in their tax bill or they're misstating something and you don't want to be connected to them. You might not know what it is, but you don't want to be connected to them for the future and risk the tax man coming back after you later down the line. There are other things to think about when it comes to liability, but the point is, is you don't want... You are just very uncomfortable keeping yourself attached to your spouse when it comes to filing taxes and what they may be doing on their tax return because you might not see their income. You might not be able to verify what exactly they're doing. And for you, it might be worth the extra cost or extra expense to separate your finances from them in that regard.

 

Now, there's a third category of reasons you might want to file separately, which I'm just going to call the other category. Some of these are technical or very specific and I can't get into all the details in this episode without boring you, but there are things I want to bring up so that you know that there are other scenarios in which you might want to file separately. Something like... Depending upon your tax situations, there are certain deductions, itemized deductions, that are limited by what's called your adjusted gross income. When you have two incomes or dual income or joint income, that might... you might not be eligible for those deductions later. But if you're a single person or I should say filing separately, then you might actually benefit from a tax perspective from that. There's a student loan question is sometimes student loans have repayment plans that are based on a person's income. When you have a joint income, your repayment plan might be a lot... might be more accelerated because your income levels higher. However, if you're filing taxes separately then your income is lower.

 

Another potential reason is for state taxes. Sometimes in some states, particularly in some community property states... If you don't know what that is, you should look up the term community property, but some community property states have benefits for filing separately. It's something for you just to think about. The main three reasons though, one is to potentially save on taxes. Two is to limit your liability for a spouse who may be cheating on their taxes. And the third is there are just some other reasons you may want to consider when it comes to your taxes. But here's the deal, I just want to give you that nugget because taxes are a super complicated area, but it's something that you should be thinking about and be aware of and have in your head is, "Hey, what's right for me this year? What's right for me next year?"

 

One last thing to bring up when it comes for timing and something for you to think about. If you get divorced on January 1st of 2019, you're considered divorced for the entire year. Conversely, if you get divorced on December 31st of 2019, you're also considered divorced for the entirety of the year and so you won't have the married election to choose from. However, if you get divorced on January 1st of 2020 you are considered married for all of 2019, which you were, and therefore you're going to have one more year of tax filing where you have to think about. Sometime in 2020 you're going to be filing your taxes for 2019, hopefully, and that's when the status is going to come into play in terms of what you need to be thinking about. Something to consider. Something for you to think about as you plan during the divorce process.

 

But the main thing is, is you need to get your own accountant during divorce. You need to, if you haven't before, talk to an accountant. Talk to someone who is not your marital accountant. If you don't trust that person or you're not... don't have a relationship with that person, at least for the year you're getting divorced and the year after, it's very wise to get some accounting help. Someone who can help you walk through and educate yourself, even if you just spend.




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