When someone discusses their reasons for a divorce, it may be surprising when they claim taxes are responsible. For many wealthy Texas couples, this issue may come up, especially with the upcoming tax year. Although the fiscal cliff has been avoided, those who have a high income may be assessed with a much higher tax bill, potentially leading them to explore divorce options to minimize the financial impact.
Everyone is familiar with the most common reasons for a divorce. While infidelity, growing apart or parenting disagreements are oft-cited factors, taxes and money issues are under the spotlight this year. One wealthy couple married and was able to enjoy the lifestyle their incomes had brought them with the tax breaks that existed in the past. However, the new tax deal raised their taxes to the point that, according to them, it became too expensive to stay together.
Their accountant recommended two options: they could stay together and pay the additional taxes due, or they could divorce and each file their taxes as a single person. If they went through a divorce, they were apparently told they would save close to $30,000 per year. While they did choose to divorce, they are still together, albeit unmarried, but reportedly paying substantially less in taxes.
A divorce option to save money may not be in the best interests of all Texas couples, but some may decide to investigate whether such a move fits their particular financial circumstances. A married couple making over $450,000 per year may be subject to higher taxes and may elect to explore their options after the new fiscal cliff deal. For many, divorce is a way out, potentially alleviating the additional tax burdens this year is expected to bring.
Source: The Fiscal Times, “For High Income Earners, Time for a Tax Divorce,” Jacqueline Leo, Jan. 4, 2013