At the most basic level, business transition planning is a strategy that can be put into play when a business is sold or changes hands. For company owners nearing retirement, a successful transition plan can play an important part in creating and preserving the value of the business after it has changed hands.
Atlanta Financial Blog
How Tax Law Changes Impact Divorce Outcomes
Breaking up is hard to do. Divorce? Even harder. But the Tax Cuts and Jobs Act of 2017 (TCJA) introduced some changes to the tax code that may make things more challenging than ever.
If your divorce was finalized after December 31, 2018 and includes alimony, it is no longer tax-deductible for the payor. But it is also no longer considered taxable income for the recipient.
Sounds like a great deal if you’re getting alimony, doesn’t it? But it may actually make settling a divorce more complicated. Without the tax break, the higher-earning spouse may be less cooperative in negotiating the amount of alimony they’ll pay.
If you’re a woman, this change can be especially inconvenient (and costly). According to the U.S. Census Bureau, 75% of husbands out-earn their wives. So there’s a good chance your soon-to-be ex-husband will be paying you alimony. If he fights to minimize his obligation because he’s no longer getting a tax break for it (which many divorce attorneys believe will happen), then you may suffer, too. A longer divorce process means you’ll have to shell out more money for attorneys and court costs —not to mention the emotional toll of a drawn-out divorce. No one wins!
Filing Status and Tax Credits
Naturally, your tax filing status will also change after your divorce. You may choose to file as single or as head of household. Filing as the latter is beneficial, since you’ll get a higher standard deduction amount and possibly qualify for some tax credits you otherwise wouldn’t get.
But you can’t file as head of household unless:
- You’re unmarried as of December 31 for the tax year in which you file.
- You paid at least 50% of the cost of running your home during the tax year in which you file.
- You have tax dependents that have lived with you for more than half the year. Typically, these are your children. But in some cases, your parents may qualify as dependents if you financially support them (even if they don’t live with you).
If you have kids and are the custodial parent, you may claim the child tax credit ($2,000 per child) and the credit for other dependents (kids over age 17, or other qualifying dependents including older adults), which can translate into up to $500 per dependent. As the custodial parent, filing as head of household can make a big difference in your tax situation. You’ll qualify for the dependent care tax credit, the earned income tax credit and the American opportunity tax credit for qualifying education expenses.
Sometimes divorced parents agree to alternate years of claiming their children as dependents. Or, if you have more than one child, each parent may agree to claim specific children each year. No matter what, both parents may not claim the same children in any given year. That’s just asking for an IRS investigation (which nobody wants!).
A financial advisor can help sort through the best strategies to avoid paying too much in taxes and conserving money for you and your family.
At Atlanta Financial, we have been by the side of women divorcing for more than 30 years. Through our DivorceFIT™ process, we will walk with you through the big picture financial issues all the way to the smallest of details that need to be addressed as you go through divorce and after. Our goal is to help you transition to the next phase in your life on solid financial footing.
The travel industry has begun to see growing demand as we move closer to summer. However, not all travel will be the same, as much of the demand is directly related to the COVID-19 vaccine and reduced CDC restrictions. Instead, industry trends have emerged based on individual comfort levels as they apply to different modes of travel.
Below we will explore some of the factors that have contributed to an increase in travel and how different industries are responding to it.
Following a year of economic instability, it appears that many of us are turning our attention to something that’s been around for decades, but has recently piqued national interest – inflation. In fact, a recent study found that people are Googling the word “inflation” at a rapid rate, with a peak not seen since 2010…
As mothers, sisters and daughters, women are often counted on to be caregivers for family members in need. Whether it’s something as small as a cold or as debilitating as a terminal illness, women are typically the ones to care for and help out when a loved one is sick. But what happens when the caregiver is in need of her own care? Too many women are stuck facing this dilemma head on, instead of preparing for it while there’s still plenty of options, resources and time ahead. Below are a few reasons why it’s so important for women to plan for their own long-term care strategies now.