November 2025 – FREEDOM LAW

Divorce is never easy, but for military families, the process can be significantly more complicated. Between deployment schedules, relocation requirements, federal protections, and a uniquely structured system of pay and benefits, military divorces introduce layers of complexity that civilian spouses never have to consider. These issues can make the emotional and financial strain of separation even harder to navigate, especially when both parties want to preserve their stability and protect their children during a difficult transition.

Military couples often find themselves weighing not only the standard questions of support, custody, and asset division, but also how service obligations and federal laws will affect the pace and outcome of their case. Because of these intertwined factors, military families frequently need more guidance to ensure the process is handled correctly and their long-term rights remain protected.

Unique Challenges in Military Divorce

Despite the emotional turmoil surrounding divorce, military spouses must still resolve the full range of issues that any separating couple faces. Questions of child custody, child support, paternity, spousal support, and the equitable division of assets and debts all need to be addressed. These issues become more intricate when military compensation, housing allowances, and deployment-related absences are involved, creating a situation where the standard civilian framework is not enough to produce a fair and sustainable outcome.

Child custody and visitation arrangements often require additional planning because deployments, base transfers, or mandatory training can disrupt even the most detailed parenting schedules. Determining a fair child support amount becomes more complicated when military pay includes various allowances, special compensation, or bonuses. Spousal support may also need to factor in a servicemember’s evolving career path and the impact of frequent relocations on the non-serving spouse’s employment opportunities.

Determining the Right Jurisdiction

For military families, one of the earliest questions is where the divorce should actually be filed. While most civilian divorces are filed where the spouses reside, military servicemembers are frequently stationed away from their legal residence or deployed abroad. This creates uncertainty about whether the stationed location, the servicemember’s home state, or the spouse’s residence is the appropriate jurisdiction.

Courts typically look at whether a posting is temporary or whether the servicemember has established residency in the state where they are stationed. A deployment alone is not usually enough to establish residency. However, a servicemember may still be drawn into the jurisdiction if they participate in the case or otherwise acknowledge the court’s authority. These determinations involve subtle distinctions that must be evaluated carefully to avoid delays or jurisdictional conflicts.

Federal Protections Affecting Military Divorce

The Servicemembers Civil Relief Act adds another layer of complexity to the process. While it does not stop a divorce from proceeding, it provides important protections to ensure active-duty servicemembers are not disadvantaged simply because they are deployed or otherwise unable to appear in court. The SCRA gives servicemembers the right to request a delay or to participate remotely, preventing the divorce from moving forward without their opportunity to meaningfully engage with the process.

This safeguard protects both the servicemember and the integrity of the proceedings, but it also requires the legal strategy to account for potential timing and scheduling adjustments.

Dividing Military Pensions and Benefits

One of the most significant differences between civilian and military divorce is how retirement pay and benefits are divided. Under the Uniformed Services Former Spouses Protection Act, military retired pay is considered marital property and can be divided during divorce just like a civilian pension. Local courts determine how the distribution will occur and what percentage each spouse may receive.

The USFSPA also includes the 10/10 rule, which permits the Defense Finance and Accounting Service to send payments directly to a former spouse if the couple was married for at least ten years with ten years of overlapping service. Additional considerations such as Survivor Benefit Plan coverage and the qualifications for 20/20/20 or 20/20/15 benefit categories create further layers of analysis, especially when long-term healthcare or access privileges are at stake. Because these benefits operate differently than civilian programs, calculations must be handled with precision to ensure a fair division.

Selecting An Appropriate Attorney

Given the numerous legal and logistical challenges involved in military divorce, choosing an attorney with real experience in this area is essential. Kaspar & Lugay, LLP, a military divorce attorney in San Diego, provides service members’ families with the focused representation needed to address these issues effectively, whether the service member is stationed in California or deployed abroad.

Their team understands the intricacies of the Servicemembers Civil Relief Act, the rules governing custody and visitation during deployment, and the financial complexities that arise when military compensation is involved. They know how to navigate jurisdiction questions, communicate efficiently with clients overseas or on base, and prepare strong strategies for pension and benefit division under the USFSPA.

Kaspar & Lugay also brings a deep understanding of family dynamics within military households, ensuring that custody arrangements reflect not only legal requirements but also the realities of service-related obligations. Their combination of legal experience, financial acumen, and technological accessibility provides military families with support at every stage of the process.

Moving Forward With Strength and Stability

Military divorce is undeniably challenging, but with the right guidance, you can move through the process with clarity and confidence. The issues unique to servicemembers and their spouses require attention to detail and thoughtful planning, but they are manageable with knowledgeable support. Protecting your future, your rights, and your children’s stability begins with understanding how military obligations and benefits intersect with family law.

If you or your spouse serve in the armed forces and are considering divorce, Kaspar & Lugay, LLP can help you navigate the process from start to finish. Contact their firm today to schedule a consultation and take the next steps toward securing a stable and informed path forward.

Kaspar & Lugay, LLP

+18585043252

12526 High Bluff Dr UNIT 300, San Diego, CA 92130

For U.S. taxpayers with ownership or decision-making authority in foreign corporations, IRS Form 5471 is one of the most important — and often most misunderstood — international tax filings. Although it may appear to be just another disclosure form, Form 5471 requires taxpayers to provide the IRS with extensive details about foreign corporate ownership, financial activity, and control. The information submitted on this form is used by the IRS to assess potential tax liabilities, audit triggers, and compliance with international reporting laws.

Many taxpayers assume they only need to file if they fully own a foreign business. In reality, the filing rules apply to a wide range of officers, directors, and shareholders who may not realize they meet the ownership thresholds. Because Form 5471 fines are among the harshest penalties the IRS issues, determining whether a filing is required should never be left to guesswork.

Why Form 5471 Exists

The U.S. tax system requires citizens and resident taxpayers to report worldwide income, even if that income is generated through a foreign entity. Form 5471 allows the IRS to monitor how U.S. persons use foreign corporations and whether those structures are being used to defer or avoid taxation. The data collected also helps the IRS determine whether other filings, including Subpart F reporting, GILTI calculations, or foreign tax credit claims, are required.

Beyond simply delaying a return, failure to file Form 5471 will act as a beacon, inviting further scrutiny by the authorities. It signals to the IRS that a taxpayer may be hiding foreign income, which can lead to penalty assessments, audits, and additional reporting requirements.

Who Is Required to File Form 5471?

The IRS outlines five filer categories, and each carries different schedules and disclosure obligations. Filing is not based on a single simple test. A taxpayer must qualify under just one category to trigger a filing requirement.

Category 1

Applies to U.S. shareholders of a Specified Foreign Corporation, including corporations where U.S. shareholders collectively own more than 50 percent of stock by vote or value.

Category 2

Applies to officers or directors of a foreign corporation when a U.S. person acquires 10 percent or more of the stock, or increases ownership by an additional 10 percent or more.

Category 3

Applies to U.S. persons who acquire or dispose of stock to reach or fall below 10 percent ownership. This also applies if the taxpayer becomes a U.S. person while holding 10 percent or more of the stock.

Category 4

Applies to U.S. persons who controlled a foreign corporation for at least 30 days during the tax year. “Control” is defined as owning more than 50 percent of total voting power or value.

Category 5

Applies to U.S. shareholders of a Controlled Foreign Corporation. This category often overlaps with GILTI and Subpart F income issues and requires additional schedules.

Because constructive and indirect ownership rules apply, taxpayers must evaluate not just their own direct percentage of stock but also ownership attributed through family members, trusts, or business entities. Many taxpayers qualify without realizing it, particularly when they own shares in a foreign company through a partnership or LLC.

Penalties for Failing to File

The IRS imposes a $10,000 penalty for each year Form 5471 is required but not filed. If the IRS issues a notice and the taxpayer does not respond, additional penalties of up to $60,000 per form may apply. The penalties are assessed per form, not per return, meaning multiple ownership positions can result in multiple fines.

Failure to file may also suspend the statute of limitations on the entire tax return, giving the IRS unlimited time to audit other unrelated items. In more severe cases, non-filers may be treated as having intentionally concealed foreign assets, leading to enhanced penalties or criminal review.

Why Filing Requires Professional Guidance

Form 5471 is not a form most taxpayers (or even most CPAs) can complete without specialized knowledge. Determining whether someone meets a filer category requires analysis of ownership, attribution rules, and foreign corporate structures. Filing the wrong schedules, selecting the wrong filer category, or omitting required disclosures can still trigger penalties even if the form was submitted on time.

This is why many individuals and business owners choose to work with an international tax attorney in San Diego rather than handling the form through standard tax preparation services. The form’s purpose is enforcement, not convenience, and the IRS treats errors the same as non-filings.

Anyone who owns shares in a foreign corporation, serves as an officer or director, or has recently acquired or divested foreign stock should seek a Form 5471 review well before tax season. Waiting until a return is due increases the risk of misclassification and penalties. A legal review is also critical if the taxpayer has missed filings in previous years and needs a strategy to come back into compliance without automatic penalties being assessed.

Hone Maxwell, LLP provides full international tax analysis for individuals, businesses, and shareholders who may meet Form 5471 filing thresholds. The firm evaluates direct and indirect ownership, determines the correct filing category, prepares required schedules, and assists with late-filing relief when necessary. Their attorneys understand how the IRS reviews these forms and help clients avoid both penalties and additional reporting triggers.

Take Action Before the IRS Does

Anyone who may be required to file Form 5471 should not wait for an IRS notice or penalty letter to confirm their status. If you have ownership, control, or officer authority in a foreign corporation, contact Hone Maxwell, LLP to review your filing requirements and protect your compliance position before penalties accrue.

Hone Maxwell, LLP

+16199804476

3465 Camino del Rio S #400, San Diego, CA 92108

Month: November 2025

What Servicemembers and Their Families Need to Know Before Hiring Divorce Lawyers