If you have young children then you probably hear it a lot….”it’s not fair!” Even now, it amazes me that my three girls can bicker over such trivial things like who got the bigger scoop of ice cream or whose turn it is to sit in the front seat. I always make sure that each child has the same number of presents under the Christmas tree, even though the total price tag for each may vary greatly. It’s all about perception, and I’m pretty sure they’re keeping track. When my siblings & I were young and complained that something wasn’t fair my Dad always had the same response: Life isn’t fair. Now I find myself countering with the same explanation. It’s certainly much easier to give that standard response than trying to reason with a 6-year old. And maybe it’s not such a bad thing that they start to understand that fact now because life doesn’t get any fairer as we become adults.
Taxes and divorce are two things that come to mind, probably because we help folks with these issues every day. None of us like to see how much of our paycheck is withheld for income taxes. And if you’re not diligent in having enough withheld during the year, you’ll have a tax bill to pay come April 15th. There’s nothing more frustrating than watching one of those news stories about what frivolous programs the government is spending our hard-earned tax dollars on, but we have to remember that our tax dollars also go to support military spending, schools, housing assistance – to name a few.
In a divorce, it’s not too common for both sides to feel like the outcome was fair. The spouse paying alimony may think it’s too much while the spouse receiving it may think it’s definitely not enough. Even the division of property can be swayed by – what else – taxes! You can’t divide a retirement account in half when one spouse is in a higher tax bracket than the other. When the money is eventually distributed, the tax bill will be higher for one than the other, and this needs to be taken into consideration when determining equitable distribution. And if one spouse wants the $200,000 home and the other takes the $200,000 IRA, again the tax bill needs to be considered. The spouse who gets the house won’t have a tax bill if they decide to sell (unless they have a capital gain) but the spouse getting the IRA will have to pay tax on the entire amount at some point in the future. If these issues aren’t addressed before the final settlement, someone is definitely going to be complaining that it’s not fair….somewhere down the line.
I hope none of my children will ever have to go through a divorce but inevitably they will have to pay taxes, a lot of them. I’m sure when they get their first job, they’ll be surprised at how much less their paycheck is than what they thought it was going to be. So I guess it’s not such a bad thing to drill that old adage into them now… life isn’t fair, never has been & never will be, so learn to accept that now, and you’ll be much happier in the long run.