One of the many challenges divorcing spouses must deal with is the division of marital property, something that frequently requires the help of divorce lawyers. Spouses must usually prove ownership of any personal assets, then divide any marital funds and property based upon the laws within the state in which they reside. Tax returns can be an important tool for dividing property, since they generally provide a record of income and owned assets and how ownership of these items has been handled in the past.
Division of marital property also includes division of money owed or earned and is not simply based on income statements. When working with divorce attorneys regarding property division, this lawyer may ask to see current and past tax returns for these very reasons.
The most obvious reason why tax returns are helpful in divorce proceedings is because they provide a record of the income of both spouses. While each spouse’s income is his or her own, there are times when income levels might be considered, especially if child support is necessary or if there is a request for spousal support.
Interest and Dividends
Interest earned or paid on financial accounts and marital loans as well as any dividends earned from marital investments must also be considered when determining the total finances of divorcing spouses and how property must be divided. Divorce lawyers also maintain that certain dividend income is excluded as being marital income, while other income must be counted.
Business and Investment Gains and Losses
When divorcing spouses own a business or have investments, either together or independently, the income or losses from these ventures must be considered in very specific ways. Depending on who owns the business or the investments as well as whether they have made or lost money, it must all be itemized when determining which assets and debts get divided and which ones do not. The sale of marital property, including the family home, must also be considered in terms of any gains made and how that must be divided.
IRA and Pension Withdrawals
When money is withdrawn from IRAs and pension accounts, there are usually associated fees and taxes that must be filed as part of a tax return. It can also help divorce attorneys determine the correct division of marital assets. Certain laws pertain to the division of retirement accounts. If both spouses are entitled to this asset, they must also share the penalties for any early withdrawals. Division of retirement accounts should be done with the help of an experienced divorce lawyer for this very reason.
Filing taxes can be complicated, even when a divorce is not involved. When divorcing spouses need to divide their marital assets, their lawyer will probably ask for copies of each spouse’s most recent tax return. Current, and even some past returns that track things such as interest paid, dividends earned, and other income and debt are all important when attempting to fairly divide a couple’s wealth. So it is important that each spouse provide a complete copy of any joint or individual tax return to their divorce lawyers, since there are various forms that must be filed with the court regarding income earned and property acquired during the marriage!
Garza & Elizondo, LLP
680 East St. Charles St, Suite 600
Brownsville TX 78520
1393 East Alton Gloor Blvd, Suite 12
Brownsville TX 78526