School will be starting soon, and then the holidays will be here. Would it be better to file for divorce now or wait until the New Year? These are common thoughts that often run through one’s head while making the decision to divorce. In addition to these considerations, many California residents also find it advisable to consider the tax implications associated with the various decisions that need to be made.
The family home is often a considerable financial consideration. While one party may decide to remain in the house, this is not always the case. It is quite possible that it will be necessary, or desirable, to sell the house. Depending upon the home’s equity, capital gains may need to be taken into consideration. If the home is sold while the couple is still married, the couple can acquire $500,000 in capital gains before there are tax implications; however, if the party selling the home is single, then only $250,000 capital gains apply before taxes become an issue.
Another financial consideration has to do with alimony. Currently, alimony is a deductible expense for the individual paying and taxable income for the individual receiving it. In most instances, the individual paying alimony earns more income and is thus in a higher tax bracket than the individual receiving alimony. However, for divorces beginning in 2019, this scenario changes and alimony is no longer a taxable item.
While divorce is often an emotional issue, it is also a financial one for most California couples. Many of the decisions made can have a lasting financial impact as well as tax implications for the individual. Prior to making any final decisions, he or she will want to discuss the matter with experienced legal counsel.