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Property division has tax implications

| Feb 7, 2018 | Firm News, Property Division |

Getting a divorce in Kentucky can naturally be an emotionally and financially arduous process. This is true even for couples who may not necessarily have many assets that have to undergo property division. An aspect of divorce that is especially overlooked among people of all asset levels is the tax implications of their marital breakup processes.

In a divorce proceeding, tax liability is extremely important, because many couples file jointly when they prepare their taxes. This can be beneficial from a tax standpoint, but it may also cause concern, because it means that both parties are liable for any tax amount owed from their tax return. Thus, after the divorce has been finalized, a previous couple might still get an unexpected tax bill in the mail from the IRS, and both individuals will be responsible for paying it.

In addition, a common mistake is where divorcing spouses accidentally exclude an anticipated tax refund from their division of assets. Not including this tax benefit in their asset division negotiations may end up sparking conflict down the road when the tax refund arrives. An attorney as well as a Certified Public Accountant can help with identifying these types of possible tax issues during a divorce proceeding.

The property division decisions and other financial choices made during a divorce proceeding, such as a decision about alimony, will have long-term impacts, either good or bad. This is why an applied understanding of the law is so critical when embarking on the divorce process. An attorney in Kentucky can offer the guidance needed to navigate the complexities of divorce so that one’s best interests are upheld and one’s rights are protected each step of the way.

Source: dmagazine.com, “Filing for Divorce?“, Feb. 2, 2018

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