Tax Deduction Considerations And High Asset Divorce
When a New Jersey couple is going through divorce, one of the things they will need to decide is which one should be able to claim deductions available for a dependent child or children. Although the IRS will normally consider a child who lives with and is financially supported by one parent over the other to be that person’s dependent, the parents are free to agree otherwise for deduction purposes.
Some parents agree to alternate the ability to take deductions on their income taxes each year. In other cases, some parents, being aware that a deduction might be available to one parent due to income level but not to another, agree to allow the lower-earning parent claim the deductions. For example, a parent’s ability to claim the child tax credit is phased out if their income is greater than $75,000, and only parents who make less than $46,997 with three children can receive the earned income credit.
Some parents are able to use the possible deduction abilities to secure agreements regarding other aspects of property division. By being willing to negotiate, a parent may be able to gain the ability to keep a larger share of a different desired asset.
In a high net worth divorce, forging agreements may take creativity and the willingness to negotiate, especially if a person is desiring to protect one type of asset and save it from division. A family law attorney might look at different things such as tax deductions in order to secure agreements. An attorney may also help advocate to make certain his or her client receives a fair share.