‘Gray divorce’ is on the rise.
A ‘grey divorce’ refers to when {couples} over the age of fifty finish their marriage. And whereas the divorce fee in some age teams has flattened in recent times; the numbers are grimmer for older {couples}. There are some studies that say divorces over the age of 65 have tripled within the final 25 years.
We’ve seen examples of this play out in real-time on social media. In May 2021, Microsoft ( (MSFT) – Get Microsoft Corporation Report) founder Bill Gates and his spouse Melinda introduced that they had been ending their 27-year marriage. After 25 years of marriage, Amazon’s ( (AMZN) – Get Amazon.com, Inc. Report) founder and former CEO Jeff Bezos and his spouse McKenzie divorced in 2019.
While divorce at any age could be troublesome, It could be particularly troublesome for older {couples}, taking. atoll on each emotional and monetary well-being. Late-life divorce additionally has various tax issues from alimony to who can declare the youngsters on their taxes.
Recommended Read: Divorce & Taxes 101: Filing Taxes After Divorce
5 Tax Tips for Recently Divorced and Retired (Gray Divorce)
- Understand the overall affect divorce has in your taxes
- Filing single may push the higher-income earner into the next tax bracket
- Alimony is now not deductible, impacting the upper earnings earner
- Determine who claims the youngsters
- Ask your tax skilled to see how the divorce would possibly affect you
Watch the video above. TheRoad’s Robert Powell discusses that and extra with Jeffrey Levine, CPA and nationally acknowledged thought-leader throughout the monetary planning neighborhood.
Recommended Read: Top 3 Tax Tips for Single Parents
Quotes| Here’s What ‘Gray Divorce’ Means for Your Taxes
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
Video Transcript:
Robert Powell: Welcome to TheRoad’s tax ideas with Jeffrey Levine from Buckingham Wealth Partners. Alright, so we’re residing in a day and age of what is known as the good divorce. What tax ideas do you’ve got for many who are just lately divorced?
Jeffrey Levine: Well, should you’re going via a divorce, the very first thing you need to do is perceive what the affect goes to seem like. Right, what does getting a divorce imply for me and my taxes? For some people which may imply a a lot decrease tax invoice than they had been accustomed to earlier than, a minimum of on a proportional foundation.
For different people, it can imply a a lot larger tax invoice. It’s essential to appreciate that whilst you’re married, a number of the time, or more often than not, you are going to be submitting a joint earnings tax return. And that takes some of a better earner’s earnings and doubtlessly spreads it, if you’ll, equally throughout that individual and a decrease earner’s earnings.
If you’ve got a divorce, chances are you’ll find yourself submitting single, and that might push you into larger brackets, and, on prime of that Bob, since 2019 alimony is now not deductible. And we all know that, typically, the individual with the upper wage pays the alimony. And in order that individual with the upper earnings and the upper earnings tax fee is now paying cash to an individual with a decrease tax fee with out getting a deduction for it.
Of course, when there are kids concerned, we have now to take a look at who’s claiming the youngsters. Does one individual get to assert them yearly? Do you turn it off each different yr? That can affect your submitting standing, the credit that you’ll be able to qualify for, and what deductions you are capable of obtain. So the very first thing to do is to go ahead and ask your tax skilled to do a faux tax return to see how that divorce would possibly affect you.
Robert Powell: Jeffrey, thanks for these tax ideas, and we all know that we have now some extra in retailer for our viewers within the weeks and months to return.
Jeffrey Levine: Well, I sit up for it and becoming a member of you and answering some extra reader questions.
Editor’s be aware: Video produced by TheRoad’s Zach Faulds
Source: www.thestreet.com