A divorce in New York can happen for any reason, but one that is not so common revolves around taxes. Wealthy residents of the state may be hit hard as a result of the fiscal cliff deal. While the law saved a large majority of people in this country from substantial tax hikes, others were not so lucky. One couple in particular decided to save themselves from the tax hit coming soon by filing for a divorce.
The couple worked in the banking industry and continued to make a very good living in the state. With their joint income, the couple purchased a large apartment, nice clothing, traveled and spent weekends in the Hamptons. They were making close to $1 million per year and enjoying a nice life as a result of tax cuts from the Bush administration.
However, the fiscal cliff deal put a major damper on their lifestyle, and the couple was faced with two options to avoid the possibility of significant tax penalties. Their accountant said they would have to either grin and bear it, or go through a divorce and file their taxes as a single person. The couple would save close to $30,000 per year if they decided to separate, and so they pursued the divorce option. They are still together, although living as a divorced couple, but appear to be closer than they ever were.
Divorce can come from a variety of reasons, but tax is one of the less common ones. However, wealthy New York couples trying to avoid major tax hits may make this reason more popular. Divorce can be a difficult decision for anyone, but for some couples both in agreement on the tax issue, it may be a practical financial move given the circumstances.
Source: The Fiscal Times, "For High Income Earners, Time for a Tax Divorce," Jacqueline Leo, Jan. 4, 2013