Category Archives: Divorce and Taxes

How Is Student Loan Debt Handled During Divorce?

DuPage County debt division attorneyIn 2017, the average student loan debt for graduates was over $37,000, which would amount to more than $45,000 when paid over 10 years with an average interest rate. This is a considerable amount of money. Graduate degrees are even more costly; the average student with a graduate degree has over $84,000 in debt, while the average medical school student has an astounding sum of $246,000 of debt. Many spouses may wonder what happens to this debt during divorce. This is a good question, because these debts can have a profound impact on a person’s life after finalizing the divorce process.

When the Loans Were Taken Out Before Marriage

If a student loan was procured before a couple was married, it will not be classified as marital property. Only marital property is divided during divorce. Non-marital property, such as bank accounts, real estate property, and debt, which was acquired before marriage remains the property and responsibility of that individual spouse. This means that if your wife took out $100,000 in law school loans before you were married, that debt will not become your responsibility after divorce.

Student Debt Acquired During Marriage

Everything changes when student loans are acquired during a marriage. However, simply because the debt is considered marital property does not mean that both spouses will be responsible for the debt. Many factors are taken into account when determining how to divide student debt, such as the following questions:

  • Which spouse profited from the education?

  • Did the non-debtor contribute to paying for the education or provide assistance in other ways, such as taking care of children while the debtor went to school?

  • How were the loans used? For example, did they cover housing as well as class fees?

  • What is the earning capacity of each spouse?

The spouse who went to school may end up being responsible for paying for all of their student loan debt after divorce based on how the above questions are answered. Depending on the circumstances and the decisions made during the divorce process, the other spouse may end up being responsible for paying off the debt as well.

A Wheaton Debt Division Attorney Can Help With Your Divorce

Distributing student loan debt during divorce can be exceedingly complicated. To ensure that your best interests are put at the forefront, you need an experienced DuPage County divorce attorney on your side. Call the Andrew Cores Family Law Group today at 630-871-1002 to schedule a free consultation.

Sources:

https://www.debt.org/students/

https://www.credible.com/blog/statistics/average-grad-school-debt-statistics/

https://www.cnbc.com/2019/05/20/how-much-the-average-student-loan-borrower-owes-when-they-graduate.html

 

Tax Season and Divorce: New 2019 Illinois Laws

Wheaton, IL Divorce LawyerDivorce laws can seem daunting for individuals who face the end of their marriage. As of January 1, 2019, Illinois regulations became slightly more complicated as new laws swept across the state and country. One significant alteration to the Illinois Marriage and Dissolution of Marriage Act drastically impacts tax claims on spousal maintenance payments.

Spousal Maintenance and Taxes

Until now, alimony has been tax deductible to the payer and taxable income for the recipient. However, for divorces filed after the beginning of the year, spousal maintenance no longer qualifies as a tax deduction to the paying spouse. Simultaneously, the recipient can no longer claim the payment as a part of gross income. Because of the tax implications, this caused a rush on divorces toward the end of 2018, as experts say couples now have less to split between them because of the law change.

The Grandfather Clause

Did your divorce finalize on or before December 31, 2018? If so, you still qualify for the previous tax regulations. If you did not sign your agreement until after that date, or you modified your contract, the new rules become applicable. Anyone considering adjustments to their divorce agreement from now on should be extremely cautious, and as always, seek the assistance of an experienced attorney.

Pre- and Post-Nuptial Agreements

Many couples choose to protect themselves and their interests by filing a marital agreement outlining what they would like to happen should the marriage end in divorce. If you have an existing prenup or postnup agreement, consider having it reviewed by a skilled divorce attorney. These new regulations potentially nullify some items in these agreements.

Contact a DuPage County Divorce Lawyer

If you have questions regarding the impact of new laws with your existing divorce agreement, or if you are considering divorce, an experienced Wheaton, IL divorce attorney can help. Andrew Cores Family Law Group understands the stress that comes with the divorce process and will work diligently to guide and fight for you throughout. Call us today to schedule your free initial consultation at 630-871-1002.

Source:

https://www.wsj.com/livecoverage/tax-bill-2017/card/1513379555

Taxes and Divorce in Illinois

taxes. DuPage County divorce attorneysIf you are going through divorce proceedings or considering initiating a divorce, you may have questions about how getting divorced in Illinois may affect your tax liability, especially if tax season is nearing. Dealing with taxes in the midst of a divorce can be problematic and fraught with emotion, and the process becomes even more complex when the taxes themselves are complicated.

Going through a divorce is stressful enough, and worrying about how the divorce may affect your taxes should not be something you need to handle alone. No matter what your tax situation looks like, an experienced Illinois divorce attorney in DuPage County can help make sure your rights are protected and that your tax obligations are met.

Common Tax Issues That May Arise During an Illinois Divorce

There are several issues that may affect a person’s tax liabilities when he or she is going through a divorce or has recently finalized a divorce. Some of the most common matters that arise include questions about:

  • Working amicably with your spouse or ex-spouse to plan how the tax returns will be filed;
  • Filing as married jointly or separately, or unmarried;
  • Considering delaying finalizing the divorce in order to file one final joint tax return;
  • Who will claim the children as dependents;
  • How child support obligations may impact dependent exemptions;
  • Splitting exemptions when there are an odd number of children;
  • Which parties may claim which deductions;
  • Determining how and whether a tax return will be split;
  • Including any alimony payments in gross income on tax returns;
  • Deciding which party owes what portion of taxes due to be paid;
  • What to do if either party was not a resident of Illinois during the tax period, or you lived apart all year and shared no income;
  • How a shared business or partnership factors into tax liability after divorce;
  • Whether you can deduct legal fees associated with tax advice related to your divorce; and
  • Indemnification protections if your spouse engages in any misconduct or false statements.

Consult an Experienced Family Law Attorney in DuPage County

Our family law attorneys are experienced in working with divorcing couples who have complicated tax issues. We regularly consult with financial and tax professionals – such as appraisers, actuaries, and accountants – who can advise regarding even the most complex tax matters.

Whether you believe your taxes may become a sticking point in your divorce, or you simply want to plan ahead to prevent any hang-ups when it comes to filing your taxes during or after your divorce, do not hesitate to consult with one of our experienced DuPage County divorce attorneys.

 

Source:

https://www.irs.gov/publications/p504/ar02.html#en_US_2015_publink1000176072