Plan for Your New Financial Future
Divorce changes every area of life when all is said and done. However, one's financial life may experience the most adjustments after divorce. With one person's income gone, the other person will have many changes they have to deal with. Continue reading to learn more about the financial changes that may come with divorce.
Changes in Income
After a divorce, the family’s income may change significantly. For example, if one spouse was the primary breadwinner, the other may need to find a job or take on additional work to make ends meet. If child or spousal support is ordered, this can also impact one's monthly budget.
In some cases, changes in income after divorce can be positive. For instance, if one spouse was a stay-at-home parent, they may now have the opportunity to enter the workforce and achieve financial independence. Whatever the case, it's important to be prepared for changes in income after divorce so that you can adjust your budget accordingly.
Changes in Expenses
After a divorce, changes in expenses can be a significant source of stress. As a result, it is important to take a close look at your budget and make changes accordingly. Try to downsize your living situation or get rid of unnecessary expenses. You may also need to find ways to increase your income, such as getting a better-paying job or working overtime. Making changes to your budget after a divorce can be difficult, but it is often necessary to maintain financial stability.
After a divorce, there can be significant tax implications for both parties. For example, if one spouse transfers property to the other as part of the divorce settlement, there may be capital gains tax implications. Similarly, if spousal support is paid, it may be tax deductible for the payor and taxable income for the recipient. It's important to be aware of these tax implications before finalizing any divorce settlement, as they can significantly impact your financial situation. Consulting with a tax professional can help you understand your divorce's tax implications and make sure that you're making the best decisions for your future.
Child Support and Custody Arrangements
One of the financial implications of child support and custody arrangements during a divorce is the potential for one spouse to be ordered to pay child support to the other. Child support is calculated according to Colorado guidelines and includes the incomes of both parties. Still, there are other factors that may be considered as well, such as the number of children involved, who pays health insurance premiums for the children, the amount paid by one parent for childcare, and so forth.
Courts have the authority to allocate the tax dependency exemptions for the children to each or both parties. Additionally, a parent who owes child support but is delinquent (or not current in their obligation) is not allowed to claim the dependency exemption, even if allocated to them for that year.
Finally, it is important to consider the financial implications of child support and custody arrangements when negotiating a settlement with your spouse during a divorce. These arrangements can significantly impact your financial stability, both in the short and long term. Therefore, it is vital to clearly understand all of the financial implications before agreeing to any particular arrangement.
Get Help from a Colorado Divorce Attorney
Divorce is a significant life event that will have long-term implications for both parties. It's important to have an experienced divorce attorney who can help you navigate the process and protect your interests. The team at Law Office of Greg Quimby, P.C. has helped countless people through their divorces, and we can help you, too.
Visit our website or call us at (719) 212-4227, and let us help you through this difficult time.