Divorce is a complicated process that will have certain impacts on finances and other areas of a spouse’s life. It is critical to navigate this process with the intent of securing terms that allow one to have a strong and stable financial future. This means making prudent decisions during the property division process that take potential tax consequences into consideration. Failure to do this could lead to unexpected financial obligations and other consequences.
Tax facts that may be useful
During a divorce, it is normal to have complicated emotions. However, temporary feelings rarely lead to smart choices that will make sense long-term. This is why it is critical to be practical when considering property division choices. Knowing the following tax facts may also be helpful:
- Tax penalties could apply when dividing or withdrawing money from certain types of accounts.
- There are typically no tax penalties when spouses transfer assets during a divorce.
- A person’s marital status on Dec. 31 of that year will determine his or her status when filing taxes.
Careful consideration of tax laws during the divorce process will reduce the chance of a spouse being surprised by unexpected tax penalties during and after his or her divorce is final.
Sound guidance at each step
Divorce will have far-reaching consequences into one’s future financial circumstances. Making smart choices during the process can lay the foundation for stability and security long-term. When navigating this process, it will help to have the guidance of an experienced attorney who can provide insight regarding the smartest financial decisions for the individual situation.