Separation and Divorce

Overview/Description
 Separation and divorce are complex and emotionally tiring life changes. Unfortunately, you will have to make significant and complicated financial decisions during this emotional turmoil. To make informed decisions, you will need to ask questions such as these: What is the best way to file your tax returns? How can you become exempt from paying federal taxes when your house is sold? and How can you ensure your alimony payments are deductible? This course addresses these and other common questions that people need answered. Predivorce planning prevents you from making uninformed financial decisions that could haunt you for years to come. Throughout this course, the tax rules or tax values provided in the examples and calculations are based on the year 2001 tax guide.

Target Audience
 General American Audience

Expected Duration
2.0 hours

Lesson Objectives:

Financial Planning Prior to Divorce or Separation

  • recognize the benefits of planning finances prior to an upcoming separation or divorce.
  • identify the guidelines for establishing or reestablishing credit.
  • identify the appropriate procedure for splitting retirement account assets.
  • identify the rules for splitting IRA and SEP accounts to avoid paying taxes.

    • Tax Considerations Prior to Divorce or Separation

  • recognize the benefits of understanding federal income tax implications when faced with an upcoming separation or divorce.
  • recognize the advantages and disadvantages for filing income tax returns as joint, MFS, or HOH after separation.
  • choose the appropriate method for filing income tax for a specific couple who are separated.
  • recognize the qualification rule for gain exclusion.
  • determine if gain exclusion applies, given a predivorce sale of a specific couple's house.
  • recognize the four exceptions that allow an individual to qualify for the increased gain exclusion postdivorce.
  • determine if a divorced individual qualifies for gain exclusion, based on the exceptions, given the sale of the marital home.
  • recognize the situations that qualify for tax-free transfer.
  • apply rules to determine if the transfer of given assets will be tax-free.
  • identify the steps that parents need to take when they want to override the default rule for claiming personal exemptions for children.
  • match examples of alimony and nonalimony payments.

    • Course Number: PD0148