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WILL IT EVER END Divorce is a trauma in itself. The trauma may not end with the signing of the divorce papers. The trauma can continue if there is a continuation of alimony and child support. One of the things that I highly recommend while going through a divorce is to speak to someone that has already gone through divorce. They will be able to advise you from personal experience of the pitfalls of a divorce, including the mistakes they made, which will help you avoid making the same mistakes. I offer the following advice: Medical Insurance When there is child support, most likely one of the spouses is paying the medical insurance. A factor that should be looked at is your divorce decree. It may state, “after base amount per year of medical expense, any amount in excess of that will be split between both parents after year-end.” The agreement should also state that the doctors being utilized are “in network”, otherwise this could be costly. Who Gets Exemption There is also shifting of exemptions from year-to-year, allowing non-custodial parents to claim exemptions. For IRS purposes, if the agreement states that each year the exemption for the child will be rotated, before the divorce is final you should have Form 8332 signed so that this is available and submitted with the tax return. Without this, sometimes there could be a problem. Child Support Another important fact is to be aware of important issues regarding paying child support. Be aware, child support guidelines were set for the children at a young age to the age of 18. Once your child goes to college, the child support payments can change and can affect the payer of the child support. In some situations it can be reduced. Alimony Paying alimony or child support in a state like New Jersey is cause for concern in itself. If you are paying through the New Jersey Probation Department, there is a possibility of something going wrong. For example, the timing of the checks received by the Probation Department may reflect a discrepancy, especially if it is based on a weekly payment schedule and you are paid bi-weekly. Self-Employment Another issue that is seldom raised, but a very important one, is if one of the spouses is self-employed and over the last few years they were audited by the IRS, it is important that the other party have a copy of the audit report. The reason for this is there may be a situation where expenses are deducted by the corporation, which the other spouse was not aware of, or the type of expenses that were being incurred. For example: Hidden assets such as, a boat, airplane, artwork, etc. This could be a benefit for the other spouse. Certified Information Statement It is important that you have your Certified Information Statement (CIS) updated just prior to divorce to make sure that the information is correct. It can easily take 12 – 16 months for a divorce to become finalized and assets can change during that period of time. It is important when choosing a CDFA that this person also has experience and understanding of tax laws. This person must also be up-to-date with all tax law changes and tax court cases that can and will affect an individual such as the innocent spouse.
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