If you are thinking about ending your marriage, you may already have a general idea of how you want to divide marital property. With few exceptions, marital property includes everything you and your spouse acquired during your marriage.
In Texas, each divorcing spouse usually has an equal interest in all marital assets. While it may be easy to divide your home, cars, furnishings and retirement accounts, it can be equally easy to forget about tax credits. Still, because tax credits can be tremendously valuable, you should include them in your divorce settlement.
Common tax credits
Tax credits reduce the amount of taxes you must pay, typically on a dollar-for-dollar basis. With some tax credits, you receive a refund. With others, you use the credit to reduce future taxes. While there are many types of tax credits, the following are popular ones:
- Earned income
- Lifetime learning
- Child and dependent care
In addition to tax credits, you may have some capital loss rollovers from your marriage. If so, you should also plan to address these during your divorce.
You and your soon-to-be ex-spouse probably have a few options for addressing tax credits from your marriage. Because your options may depend on the nature of the tax credit, though, you may want to seek assistance from a financial professional. You may also want to negotiate which parent claims the child tax credit after divorce.
Even if you do not have any tax credits to divide, you probably want to devote a great deal of time to listing all marital assets. Ultimately, if you forget to include tax credits or anything else in your settlement negotiations, you may have a hard time obtaining your rightful share of the marital estate.