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Tax considerations after divorce

On Behalf of | Apr 27, 2021 | Divorce |

Dividing property and assets is one of the most important aspects of divorce. This process can be complicated, even when it comes to issues that seem simple. In addition to deciding which spouse gets what, there are several tax implications to consider, which means that divorce requires detailed tax planning. If you’re an Oklahoma resident, here are some important things you need to know about your tax status during and after divorce.

Taking the first steps

The courts will require you to represent complete proof of your debt, income and assets. You’ll have to provide full disclosure concerning your finances, which means all the information you give to the judge must be accurate and truthful. Be sure to file any outstanding tax returns and get copies of the returns as well as copies of your loan documents and bank statements. You can also work with your accountant to ensure that all your financial bookkeeping is up to date. Make sure you present any real estate documents you have to the judge as well. You need these documents in your records so that you can see who is listed on all your real estate titles.

It is essential that you communicate openly with your accountant throughout your divorce. If you and your spouse have an accountant who has been preparing your taxes during your marriage, it may be best to hire a separate finance professional during your divorce to prevent a conflict of interests.

Tax planning for property settlements

You’re not automatically taxed when the property is transferred if the transfer is between you and your spouse, but the spouse who sells the property could incur taxes. Generally, the IRS doesn’t recognize losses or gains from property transfer during a divorce. However, property transfers could pique the IRS’s interests if one spouse is a nonresident alien or if the property is governed by regulations pertaining to trust or stock redemption transfers.

Working with an accountant and a family law attorney throughout your divorce may increase the chances that your divorce will be settled efficiently and fairly. These professionals may help you ensure that no important matters are overlooked.