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Special Considerations for Divorcing Business Owners

Posted by Admin Posted on Dec 12 2019

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No one wants to go through a divorce, but it's a life event that many people experience at least once in their lifetime. A divorce can become even more difficult when you have a small business. That's because, under some circumstances, your business could be considered "marital property." You could be required to pay extra taxes because of a transfer of assets that happens during a divorce.

 

The Tax-Free Transfer Rule

A tax-free transfer lets most of the things that you need to split up happen without anyone needing to pay additional taxes. The asset gains won't be counted as additional income. Any future taxes will need to be paid by your spouse, not you. If your former spouse owns any shares of your company and they decide to sell them, they will owe capital gains tax, not you.

 

Your Retirement Account

One exception to the tax-free transfers has to do with retirement accounts. You might end up paying taxes on them if you're not extremely careful. Include a qualified domestic relations order within your divorce papers before your spouse makes withdrawals from the account. The order makes your former spouse a co-beneficiary of the retirement account. This makes them responsible for any taxes on withdrawals they make.

 

Why You Should Talk to Your Accountant

When you get divorced, everything from your tax status to your retirement accounts is up in the air. For this very reason, it's important to get accounting firms in Las Vegas on board before you make any major moves. While it's an extra cost in a time where you're paying for a lot of services, but you could end up saving you a lot of time and energy in the end.

 

Unfortunately, divorce becomes a fact of life for many, many people. It can leave you exhausted. But if you do certain things in the right way, you don't have to be financially drained. When you follow the guidance of your accountant, you can be certain that you did everything within your power to protect your financial interests.