Did you know that almost every divorce decision has a tax implication?
Most people do not realize that almost every decision they make in their divorce will have a resulting tax implication, even decisions with respect to parenting arrangements. These are just a few of the examples.
Financial Decisions – Property
When you are negotiating the division of your matrimonial property, you must know what the associated tax liability is. Stocks and mutual funds have very different tax results than RRSPs. Retaining your family cabin has very different implications than retaining the matrimonial home.
Financial Decisions – Income
You should be aware that different types of support you may receive and/or pay as a result of your divorce are taxed differently. The resulting tax will also depend on the income tax bracket of your total income from all sources.
Children Decisions
Other than the intrinsic benefits to spending time with our children, these arrangements after divorce may also have certain tax advantages or disadvantages.
Divorced parents who do not reside with a new partner may be able to qualify to claim a tax deduction for a child, which may also become a point of negotiation. Parenting decisions should always be in the best interest of the children but be keenly aware of the resulting tax consequences.
Before you sign your final divorce agreement you must ensure that you understand the tax implications of all of your permanent decisions so that you make the best decisions for your financial future!
Visit Alberta Divorce Finances to learn more about what you should know before you sign your settlement agreement.