There are a number of tax considerations people in Oklahoma who are getting a divorce should keep in mind including those associated with the tax reform bill. One of the major changes is that starting in 2019, alimony will no longer be taxable for the recipient or tax-deductible for the payer.
This may raise an issue with prenuptial agreements that address the issue of alimony, and it could be necessary to get guidance from the IRS. Another result of the tax reform is that the valuation of businesses might be different. It is possible to value some businesses at a higher amount, and this may or may not be to a person’s advantage depending on the situation and who owns the business.
One expert says the spouse with fewer assets should make sure that any assets inherited do not come with hidden expenses. For example, a home with the mortgage paid off worth $500,000 may be a more valuable asset than a $1 million brokerage account if the account has embedded capital gain. For some retirement accounts, such as pension plans, it is necessary to have a document known as a qualified domestic relations order. A QDRO can be used to avoid taxes and penalties when the account is split. It could be necessary to roll the money over into a certain type of account.
Couples might want to try to negotiate the terms for property division. Their attorneys may assist in this process. Advantages of negotiation are that it can be quicker and less expensive, and it can allow the couple more control over how the property is divided. However, if one person refuses to cooperate or one party is particularly manipulative, litigation might be the best choice. A person may want to discuss goals and strategies for both negotiation and litigation with the attorney.