Tax Implications of Divorce in Arizona

The Tax Implications of Divorce in Arizona an article by By Timothy Durkin, Attorney at Law

Divorce, also known in Arizona as the dissolution of marriage, is the official termination of your marriage in the eyes of the state. Although Arizona is a no-fault state and no “fault” must be given to separate, this doesn’t mean divorce is a simple event. Divorce is an intricate emotional and financial event with many layers. One of the biggest mistakes couples make in Arizona during the divorce process is not considering the long and short-term tax complications that can arise from the dissolution of your marriage.

One of the most important aspects of your divorce are the financial stipulations. A marriage is not only an emotional relationship but a financial one as well. Who will keep the house? Who will pay for the house? Who has the ability to receive child support for the children and to what extent?

Keep in mind that although spousal maintenance or alimony is tax deductible, child support payments in Arizona are tax-neutral and can not be deducted. If you receive a large amount of alimony, expect to owe the IRS at the end of the year. If you are the higher income earner and wish to write off the spousal maintenance as a tax deduction, remember to give the payments in check or cash and follow all of the guidelines outlined by your divorce and tax professionals. Remember that you can not live together or file a joint return if you wish to use the deduction. Some couples choose to not itemize payments for alimony, but this is unusual as the overall tax benefit is usually greater. If you decide to not itemize the alimony payments, your ex-spouse will not have to pay taxes on the spousal maintenance received. Your marital status is determined by your marital status the last day of the tax year.

Another common tax issue parents forget is who is able to claim a children as a dependent. Traditionally this deduction goes to the parent with primary custodial powers, but it can also be transferred to the non-custodial parents using a Form 8332. As of 2013 having a dependent reduces your taxable income by $3,800. Each child under the age of 17 is also eligible for a Child Tax Credit of $1,000. In addition 35% of eligible expenses for their care up to $6,000 can be deducted from your taxable income.

Marriage and its termination are complicated legal and fiscal processes. If you are unsure of your legal obligations, contact a family law or tax professional to discuss your case. Failure to pay taxes owed may result in a audit down the road, leaving you with significant back taxes.

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What if only one half of the couple wants to get divorced?

Divorce for One, Please

Westfield Mediation, LLC
© 2013

What if only one half of the couple wants to get divorced?

As divorce mediators, we often hear this question. Generally, both people know that their marriage is rocky. But often, only one spouse feels ready to end it. The reasons vary – maybe one person is more willing to deal with conflict than the other, or one person feels more ready to start fresh. Sometimes, it just takes one person longer than the other to accept that it is not working out. Still, as we tell our divorce mediation clients, if one spouse wants a divorce, it will usually happen. It may just take longer and be more complicated than if both parties agree.

Legally, the divorce process begins when one spouse files a divorce complaint in court. And even if the other party never responds, the divorce can still go forward. This kind of “divorce by default” is doable, but it’s not in either party’s best interest because the agreement doesn’t include the kind of compromises that ensure that both people will follow through. It also involves expensive, time-consuming litigation.

View the entire article here: Divorce for One, Please
Click here for more information about Westfield Mediation, LLC

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Today’s Thought

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Divorce survive and thrive

when going through divorce you will survive and thrive

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Writing in the sand

I was cleaning up some old files this morning and came across the monthly newsletter we published back in January 2002. In it I had written about the story of two friends walking through the dessert. This story still resonates with me to this day, so I thought I would share it again…..

The story tells that two friends were walking through the desert. At a certain point of the journey, they had an argument, and one friend slapped the other one in the face. The one who got slapped was hurt, but without anything to say, he wrote in the sand: “TODAY, MY BEST FRIEND SLAPPED ME IN THE FACE.”

They kept on walking, until they found an oasis, where they decided to take a bath. The one who got slapped and hurt started drowning and the other friend saved him. When he recovered from the fright, he wrote on a stone: “TODAY MY BEST FRIEND SAVED MY LIFE.”

The friend who saved and slapped his best friend, asked him, “Why, after I hurt you, you wrote in the sand, and now you write on a stone?”

The other friend, smiling, replied: “When a friend hurts us, we should write it down in the sand, where the winds of forgiveness can blow it away, and when something great happens, we should engrave it in the stone of the memory of the heart, where no wind can erase it.”

……..Learn to write in the sand.

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Telling the Kids About the Divorce

Probably one of the hardest things a divorcing couple will have to do is tell the children. When parents decide to divorce it is only fair to be honest with the children. Depending on the family dynamics and the ages of the children some may already be well aware that there are problems, while others may not have a clue about what is going on.

Ideally it is best to gather together as a family to tell the children of an impending divorce or separation. There are a few reasons for doing it this way. First it presents a united front. It shows the children that even though you are getting divorced you still both love them and are united in your responsibility to them. It also allows an opportunity for the children to ask questions and get answers from both parents.

Even in the best of situations divorce is not easy, but if handled correctly parents can make the transition less stressful for the children and therefore themselves.

More information on Telling the Children

A great tool for younger children is the Sesame Workshop Little Children, Big Challenges: Divorce tool.

According to their website “Divorce is one of the most common major transitions in children’s lives, with 40 percent of all children experiencing the divorce of their parents. With Little Children, Big Challenges: Divorce, Sesame Street has created much-needed resources for families with young children ( ages 2 to 8 ) as they encounter the tough transitions that come with divorce.”

This tool is the collaboration of a national group of clinical psychologists and educators

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Child Support Enforcement

The Child Support Enforcement Program is a partnership between the Federal, state and local governments. It is part of the U.S. Department of Health and Human Services. The program is authorized and defined by statute,Title IV-D of the Social Security Act. The 1975 legislation (Public Law 93-647) added a new part D to title IV of the Social Security Act. This statute, as amended, authorizes Federal matching funds to be used for enforcing support obligations by locating nonresident parents, establishing paternity, establishing child support awards, and collecting child support payments. – See more

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Just a few thoughts

Thoughts for today……

“Relationships are like glass. Sometimes it’s better to leave them broken than try to hurt yourself putting it back together.”
~ Anonymous

“I was never one to patiently pick up broken fragments and glue them together again and tell myself that the mended whole was as good as new. What is broken is broken, and I’d rather remember it as it was at its best than mend it and see the broken pieces as long as I lived”
-Margaret Mitchell

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Ten Questions to Ask a Divorce Lawyer BEFORE Hiring Them

If you’re considering divorce, hiring the right divorce attorney is crucial. Just how do you decide who is a “good” lawyer for you? What questions should you be asking when you interview them and what answers should you be looking for?

Ask the attorney…

  1. How much of their practice is devoted to family law. Just like you wouldn’t go to an allergist if you were having problems with your feet, you shouldn’t hire an attorney that doesn’t specialize in family law. There are many ins and outs that can only be learned with experience handling divorce cases.

  2. How much time they have spent in the court where your case will be heard. Almost as important as the amount of time that an attorney has been practicing divorce is how familiar they are with the personnel (judges, clerks etc.) at the courthouse.

  3. To explain what is involved in the divorce process specific to your situation. Can your case be mediated? Do they anticipate your case going to trial? Is your case a candidate for Collaborative divorce? A good divorce lawyer should be able pinpoint and explain the legal issues and general concepts of your case.

  4. How they charges for their time. Most attorneys charge a retainer when working on divorce cases. Make sure you understand how the retainer works such as what happens when the retainer is depleted. Are you required to give another retainer or will you be billed as you go? Do they charge a different hourly fee for time spent in court? Will you be billed for travel time, and if so at what hourly rate? No attorney should be able to tell you exactly what the cost will be because the circumstances of every divorce are different. However, they should be able to give you a rough estimate and what is included in that estimate.

  5. How much work will be done by paralegals or associates? Many attorneys have a paralegal on staff that is responsible for a lot of the day-to-day workings on a case. They should tell you if other staff such as a paralegal will be working on your case and how much their hourly rate is (it should be significantly less than the attorneys hourly rate).

  6. If they have experience working against the opposing attorney, if there is one already involved. An attorney who has gone up against your ex’s attorney will know how they operate. If they have not worked with the opposing attorney before you can ask if and how they would research the other attorney.

  7. What their strategy would be for handling your case. By the end of the consultation the attorney should be able to provide you with an overall strategy. Is that strategy something you feel comfortable with? Of course you should realize that the strategy may change during the course of the proceeding, but the overall objectives should stay the same.

  8. How their office handles communicating information to their clients. Will most of the communication be by phone or via email? Most states have regulations in place requiring attorneys provide their client with copies of all correspondence related to the case.

  9. What are normal office hours and can someone is reached outside of those hours. How do they respond if something comes up when the office is closed? Do they have an answering service that can get in touch with them?

  10. If they have ever been the disciplined by the state bar. Don’t feel like you are being rude. It’s something you have a right to know and it’s better to find out this information before you hire an attorney. If the answer is “yes,” they have been the subject of a disciplinary action you may still want to hire the attorney. Do your research and then decide.

Now ask yourself……

What does my gut instinct tell me about the attorney?

Remember, your attorney is going to be helping shape your future. When all is said and done your comfort level with the attorney is vital. Trust your instincts. If you don’t feel comfortable, pay attention to your gut and keep looking. Take your time, be thorough and you will find the right attorney for you.

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Letting go of the grudge

It’s about to happen again – a family milestone. This time it’s the birth a grandchild. This should be one of the most joyous experiences. Notice the emphasis on the word “should”? Unfortunately the reality is that the grandparents are divorced and one of them is unable to let go of their bitterness towards the other.

When one person continues to hold a grudge after their divorce it poisons the whole family. Holding a grudges is known to be harmful to both physical and emotional well-being. It also has negative psychological effects on children.

So how does a person recover from divorce and rid themselves of a grudge? Here are a few suggestions to ponder:

  • Grieve the loss of the relationship. I know I seem to harp on this (see my previous blog entry) but I feel it’s really the first step in the recovery process.
  • Don’t be afraid to ask for help. That doesn’t mean dumping on anybody that will listen. There are many divorce support groups ready to lend an ear or a shoulder to cry on in a safe environment. Get professional counseling if necessary.
  • It’s rare that the demise of a marriage is 100% the responsibility of one person. It’s much easier to place the blame on the other person. Accept some responsibility. Clearly I’m not talking about abuse or addiction here.
  • The past is the past so don’t dwell on it. Learn from the divorce and look to the future.

Divorce is an intense, life altering experience. It’s painful and it can make you crazy but at some point in time it should be over. There are few things less attractive than someone who bashes their ex for years after the divorce is final.

So, for the sake of yourself, your children and your totally innocent grandchildren let it go.

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