- When a marriage ends, the number and variety of decisions to be made in what is already a time of emotional turmoil seems endless. At a very emotional time in life when most often you should not be making any big decisions, separation and divorce demand financial decision making that will alter the rest of your life; decisions that are most often permanent! Emotions can hinder your ability to make sound financial decisions. The decisions and agreements made following the end of a marriage can affect the tax and financial well-being of both parties for years afterward.
Divorce and Taxes
Divorce and Taxes
- Reaching agreement on all the income tax return issues will avoid additional conflict down the road. Co-operative approaches to the parties’ tax returns can increase the amount of funds retained by the parties.
- At Calgary’s Choice Tax Services and Alberta Divorce Finances, we have developed expertise on the issues of deductions, credits and benefits with respect to your income tax return situation in separation and divorce. Sharon Numerow educates family lawyers, accountants, tax and financial professionals in this area.
- The rules and administrative policies governing the taxation of separated and divorced taxpayers has become more complicated and Canada Revenue Agency has become more diligent in assessing these individuals. CRA’s position is that if the parties are not in agreement with respect to which party is making a particular claim, then neither party shall be allowed to make that claim.
- Spouses should work together to ensure their intentions are achieved; agreements should reflect the resolutions you have made and the claims you want to make on future tax returns. Strict compliance can make all the difference. Numerous court decisions have held that even where the parties agree and their intent is clear, failure to get the correct paperwork together and in order may mean that the parties’ intent is thwarted along with the associated tax savings.
- Review by a tax professional is essential; spending time and money to ensure that all foreseeable tax issues are thoroughly discussed and that all the formalities are complied with will minimize future conflicts with CRA.
Want to claim a deduction for spousal support, legal fees, child care or the eligible dependent and put thousands of dollars in your pocket? Set up a consultation so you ensure the correct wording is addressed in your agreement and your claims satisfy the criteria in the Income Tax Act.