How the Tax Code Can Benefit Divorcing Couples
Surprising as it may seem, there are advantages within the tax code for to divorcing couples. With the help of a knowledgeable Financial Specialist as part of the collaborative divorce process, couples may be able to reap some financial benefits in certain situations.
For example, couples with ERISA-qualified retirement funds can withdraw funds – without penalty – to pay down debt, make a down payment on a second residence, or take other steps to improve cash flow. In addition, the tax rate on income of a higher-earning spouse can be transferred, in the form of spousal support, to the lower-earning spouse, which makes it tax deductible to the higher earner, and taxable at a lower rate to the lower-earner, resulting in greater after-tax income.
This is called “tax effecting income” and it is designed to help couples transition with greater net income into two homes.
Collaborative Divorce Minnesota Can Help
By utilizing collaborative divorce, we put people across Minnesota in touch with Financial Specialists who thoroughly understand the maximization of after-tax income. To learn more, please call our Edina office at 952-405-2015 or send us a message using the form on our contact page to get in touch with our professionals.