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Since I have seen people asking these questions in various threads over the years, I thought one thread may be easier to refer to. This is not an all-inclusive list of what you need to consider and I will add more later. Please add any info that may be helpful to those going through the D process.

INCOME TAXES:
IRS Publication 504 - Divorced and Separate Individuals
http://www.irs.gov/pub/irs-pdf/p504.pdf

If you live in a community property state, your tax return filing for the year of divorce will be different than those who do not. Community property states include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Info is on page 23 of Pub 504.

Claiming exemption of dependent children - The custodial parent that has a child more than 50% of the time will usually be entitled to claim the dependent exemption/deduction...that is IRS law and there are few exceptions to this. If the time between parents is very close to 50/50, you will want to be careful not to lose this tax benefit if you usually have it.

If you have language in your decree that gives the other non-custodial parent this tax benefit for any given tax year, you will have to provide your ex with an executed Form 8332. If the decree states your ex is awarded this tax benefit but you claim the child anyway, your ex can sue you. The IRS will hold you and your ex to the IRS Code so do not assume you can claim the child every other year or that if you have two children that you always get to claim one. If you are the custodial parent and the BS, I would not voluntarily give this tax benefit away to a WS without some type of compensation. Bottom line is the IRS does not care about the terms of your divorce. If there is no specific language in your decree about who gets to claim a child in a given tax period, the custodial parent usually wins out. You do not want to add more stress to your life by fighting the IRS.

Form 8332
http://www.irs.gov/pub/irs-pdf/f8332.pdf


MORTGAGES
Like the IRS, your lender does not care about the terms of your divorce. If you are on the loan, you will be held liable...period! A lender is not going to remove anyone from a loan...a re-fi will have to take place. A quit claim deed between exes or spouses does nothing to remove your liability from a lender. Sever this financial tie the right way. Keeping this financial tie can become a nightmare.


CHILD SUPPORT VS ALIMONY
Child support is not taxable income. Alimony is taxable income and must be reported on your tax return. If you pay alimony, it can be deducted. You will need your ex�s SSN to report/deduct alimony. If you receive support, generally you are better off asking for higher child support and less alimony so you lessen your tax burden. If you pay support, you are generally better off paying less support and more alimony. Consider your level of income, deductions, state laws about when CS/alimony can be modified, etc.


QDRO (QUALIFIED DOMESTIC RELATIONS ORDER)
If you are awarded all or a portion of your ex�s retirement plan(s), you NEED to have a QDRO drafted to properly transfer and title the asset into your name. A divorce decree alone is not enough to protect you and you will find yourself in another legal battle if your ex dies, remarries or withdraws funds before a QDRO is processed and finalized. A QDRO can take over a year to finalize so do not delay in getting the process started.

Info from the Dept of Labor:
http://www.dol.gov/ebsa/publications/qdros.html

Top Ten QDRO Mistakes:
http://www.kegelmcburney.com/sites/default/files/Top%20Ten%20QDRO%20Mistakes.pdf

This is a random website of a QDRO preparer that provides some basic good info: http://www.stanbeutlerjd.com
See the FAQ.

Ideally the QDRO is finalized before the divorce but it is not necessary. If the divorce is finalized before the QDRO, make sure the details of the retirement benefits are addressed and specific in the decree including who bears the cost of the QDRO drafting.


BW - me
exWH - serial cheater
2 awesome kids
Divorced 12/2011




Many a good man has failed because he had a wishbone where his backbone should have been.

We gain strength, and courage, and confidence by each experience in which we really stop to look fear in the face... we must do that which we think we cannot.
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BW - me
exWH - serial cheater
2 awesome kids
Divorced 12/2011




Many a good man has failed because he had a wishbone where his backbone should have been.

We gain strength, and courage, and confidence by each experience in which we really stop to look fear in the face... we must do that which we think we cannot.
--------Eleanor Roosevelt
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Thank you! this is helpful!


Me: BW 33

Kids 11, 8, 6, 18 months
DDay 1/22/13
Plan B 6/21/13 long overdue
broke Plan B august 2013, my mistake
Divorce 6/30/14

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Originally Posted by black_raven
MORTGAGES
Like the IRS, your lender does not care about the terms of your divorce. If you are on the loan, you will be held liable...period! A lender is not going to remove anyone from a loan...a re-fi will have to take place. A quit claim deed between exes or spouses does nothing to remove your liability from a lender. Sever this financial tie the right way. Keeping this financial tie can become a nightmare.

Because of the decline in the housing market that has taken place over the past few years, refinancing may not be an option for some homeowners. If you owe more on your house than it will appraise for, they will not allow for you to refinance unless you put money down to cover the difference.

However, most mortgage companies will allow you to assume the mortgage. The assumption process will remove one or more of the parties from the mortgage, and allow the remaining parties to keep the mortgage at the current terms. So even if your home is underwater, you can continue to keep the home. However, you must reapply for the loan, and meet debt/income as well as credit requirements.

This was how I handled my home when I divorced in 2009, thinking that I would ride out the housing market storm and sell the house when the value equalized. However, I remarried, and my current wife did not want to live in my ex-wife's house, so I ended up selling, and losing a considerable amount of money. In hindsight, I would have sold the house during the divorce, split the loss with my ex, and walked away to start over.


Me DH33
Her DW33
DS3

Divorced WxW38 7/09
DD9
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bump


BW - me
exWH - serial cheater
2 awesome kids
Divorced 12/2011




Many a good man has failed because he had a wishbone where his backbone should have been.

We gain strength, and courage, and confidence by each experience in which we really stop to look fear in the face... we must do that which we think we cannot.
--------Eleanor Roosevelt
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Thanks BR. Here's what my lawyer wrote me about the mortgage deal:

She shouldn�t fuss too much [about being on the mortgage], because of California�s anti-deficiency legislature, which means that the security for the loan is the real estate, not your wife personally. But if she insists, it is common to give you a period of time to refinance, say 9 to 12 months.

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Originally Posted by still_kicking
Thanks BR. Here's what my lawyer wrote me about the mortgage deal:

She shouldn�t fuss too much [about being on the mortgage], because of California�s anti-deficiency legislature, which means that the security for the loan is the real estate, not your wife personally. But if she insists, it is common to give you a period of time to refinance, say 9 to 12 months.

Yes the house is security for the loan but your wife most certainly is personally liable for the mortgage. You can ask for a period to re-fi (that is common) if you decide you want the house (think very carefully about this too) but your wife is personally liable for the house...so are you.

Anti-deficiency laws are only in regards to foreclosure. If your house goes into foreclosure (or short sale), you will also incur a potentially huge federal tax liability as well...assuming the house is underwater. The Mortgage Debt Forgiveness Act went bye bye on 12/31/13.


BW - me
exWH - serial cheater
2 awesome kids
Divorced 12/2011




Many a good man has failed because he had a wishbone where his backbone should have been.

We gain strength, and courage, and confidence by each experience in which we really stop to look fear in the face... we must do that which we think we cannot.
--------Eleanor Roosevelt
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BW - me
exWH - serial cheater
2 awesome kids
Divorced 12/2011




Many a good man has failed because he had a wishbone where his backbone should have been.

We gain strength, and courage, and confidence by each experience in which we really stop to look fear in the face... we must do that which we think we cannot.
--------Eleanor Roosevelt
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If you don't know what you are signing then don't blindly sign it!!

http://www.forbes.com/sites/peterjr...f-for-taxpayers-spouse-by-being-helpful/


BW - me
exWH - serial cheater
2 awesome kids
Divorced 12/2011




Many a good man has failed because he had a wishbone where his backbone should have been.

We gain strength, and courage, and confidence by each experience in which we really stop to look fear in the face... we must do that which we think we cannot.
--------Eleanor Roosevelt
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Income qualifications for a new mortgage:

When my divorce was final, I was a SAHM. During my marriage, I had always worked and also had my H's income to qualify for a mortgage. For the first time, I would be buying a house on my own and doing so unemployed. Given the downturn in the market over the last several years, the lender requirements had also become stricter. I had sources of income but there were still issues I was unaware of at the time of my divorce that I wish I had known.

Child support and alimony can be used as reported income. However, a lender will only consider an income source that was "guaranteed" for a minimum of three years. If the child support or alimony is to end within those three yrs of the house closing that income source was not considered as income (or adjusted if reduced)...even if it was shy by one month. This is a Freddie/Fannie guideline and no exceptions would be made. There really isn't even a "guarantee" of this income since an ex-spouse can stop paying child support and/or alimony at any time but that is what it is. Parents who receive child support for older teen children need to consider how this requirement will affect their house buying options.

Your divorce decree must be given to the lender along with bank statements for the last 12 mos to show that you in fact receive these funds. If you have another source of income outside of child support and/or alimony, it also must be an income stream you will receive for at least three yrs.

All of this affects the loan amount you will be approved for since your ratios will affected. You can have a stellar credit history and even substantial cash assets...a lender will not care. They want to see "guaranteed" income or a paystub...period...even though there is no guarantee you will have a job two months from now.

The guidelines may have softened by now but you should check with a lender during the divorce process even if you don't plan on buying a house right away. You may have to time your purchase right to qualify for a loan amount you want.


BW - me
exWH - serial cheater
2 awesome kids
Divorced 12/2011




Many a good man has failed because he had a wishbone where his backbone should have been.

We gain strength, and courage, and confidence by each experience in which we really stop to look fear in the face... we must do that which we think we cannot.
--------Eleanor Roosevelt
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I just read in an article that the average American divorce costs between 16k and 25k.

Are those numbers for real?! Did anyone's divorce fall in line with that?

Last edited by Ever2Late; 06/04/15 03:13 PM.
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Originally Posted by Ever2Late
I just read in an article that the average American divorce costs between 16k and 25k.

Are those numbers for real?! Did anyone's divorce fall in line with that?

It could be if the parties don't agree on anything and/or have their lawyers duke out every little thing, call their lawyer for every little things, etc...it depends but if two attorneys are being used it will also add up even quicker.

There are what is called a "No Frills Divorce" or "Uncontested Divorces" that are a flat rate an attorney will charge. Copied this from a lawyer' website that offer this"

"Agreed / Uncontested Divorce

TOTAL COST $1500.00
or 4 payments of $400
This fee includes all filing fees & court costs!

(The filing fee alone is $233 in ABC County, and that is INCLUDED in the $1500.)

This fee includes drafting, preparing and filing of an agreed divorce petition, waiver of citation, final decree, withholding order, information sheet on Suit Affecting Family Relationship, and child support forms.

You have children or property? . . . Your cost is the same.

Take the worry out of your divorce, a lawyer will draft and review all the needed documents, obtain a court date, and appear in court with you."

from another site:

"program...is designed for clients who agree on EVERY SINGLE TERM OF THE DIVORCE. Terms for the divorce include how you are going to divide property between yourselves, who will be responsible for what debts you owe, who the children will live with, who will make decisions regarding the children, who will pay child support and how much, etc."

I know people who paid $1k for a divorce, $10k for a divorce and even $100K...it depends on a lot of things.


BW - me
exWH - serial cheater
2 awesome kids
Divorced 12/2011




Many a good man has failed because he had a wishbone where his backbone should have been.

We gain strength, and courage, and confidence by each experience in which we really stop to look fear in the face... we must do that which we think we cannot.
--------Eleanor Roosevelt
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Thankfully I had a prepaid legal plan at work, it was like $100 a year or so. I assume the attorney got a fixed amount, because he was very to the point and didn't stir the pot at all, just took the next steps towards resolution.


Me 40, OD 18 and YD 13
Married 15 years, Divorced 10/2010
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Mine cost $180.50 and the same for the ex-H. Oh, he paid $30 or so for service. I just mailed the stuff.

No kids, no real estate and a signed prenup in place that cost about $600 (for both lawyers) before the wedding.


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