Divorce and Taxes: A Guide to Income Tax Decisions for a Seamless Transition

This week, we discuss income tax considerations, giving you guidance on whether to file independently or hire a professional accountant. We will emphasize the importance of understanding your financial complexity and suggest options such as DIY software or professional assistance based on each individual’s unique circumstances. The conversation covers the significance of finding a compatible accountant during divorce, offering insights and important questions to ask when selecting a financial professional.

Divorce can be emotionally and financially overwhelming. That's why I'm teaming up with Sunny Wishart, president and founder of A la Carte Financial and a certified financial planner. We will show you how to understand all things money without feeling ashamed, overwhelmed, or embarrassed. You will learn. Learn more. Ask questions. No question is a dumb question. Welcome to Money with Sunny.

If your income and expenses are fairly simple, then you can do it on your own compared to if you have a little more of a complex situation when it is recommended to engage a professional, not necessarily a bookkeeper, but an accountant who is going to do those annual filings for you and make sure that you're getting all of the benefits you need or carrying forward what you need.

Doing your taxes yourself also depends on if you are employed or self-employed. If you are self-employed it is a bit more complicated, but if you are employed by someone else and have an RSP or a TFSA maybe, and understand your financial situation, you can easily do your taxes by yourself. There are kits sold by Scotiabank and Wealthsimple and there are also online platforms like Turbotax that are guided and super detailed to help you understand the process and also make it simple for you. These platforms are affordable and also safe to use and super user-friendly.

If your financial situation is a little more complicated, maybe you have an investment property or spousal support is coming in or you own your own business or you're just not sure about your financial situation, you might want to hire a professional, hire an accountant. Professionals will help you manage your web of finances properly and make sure you’re receiving the most benefit out of it.

Finding an accountant is not easy. You really need to know what you are looking for and make sure to ask questions based on your situation so that you can find out who would be a good fit for working with long-term. For example, if you’re going through a divorce, an important question is asking if they have experience working with divorce. With any professional, you want to make sure that you feel comfortable asking questions, especially when it comes to finances, they should answer all of your questions. Interview a few people before deciding who to work with.

And if you're not happy with the accountant that you have right now, it's okay to make a change. And if the accountant you're using right now is going to continue to work with your spouse and that makes you feel a bit uncomfortable, then maybe you want to make a change and have someone who's just working with you and only you and you can work with for the rest of your life and move forward with and grow your finances and grow your wealth. That's really important.

Accountants are also not cheap. So if you feel like your finances are easy enough but you don’t want to do your taxes yourself, you can also take assistance from H&R BLOCK people. You won’t be able to build a similar relationship with them as you would with an accountant but they can get the job done and take one thing off your list especially if you have the tax deadline coming up close.

If you’re doing your taxes yourself and make a mistake or forget to add something, it is not the end of the world. Everything can be course corrected next year. The government's not going to come and take your house or take your stuff and come storming in. There are grace periods for all of this. The government will probably reach out to you to review a change in details or so. You will receive a notice if they want more information.

Doing your taxes can be scary and overwhelming and if you feel like you need to speak with a professional to figure out where you can start, you can schedule a call with me.

And remember, you're perfect just the way that you are. You are awesome. You are wonderful, you are worthy, you are loved. And we look forward to talking to you again next week.

Wendy