Tax season is now around a month behind us. Many people are likely happy to be out of this sometimes stressful season. However, it is important to remember that tax season is not the only time it can be very important to think about tax matters.
This is because the things that happen to a person and the decisions a person makes throughout the year can have future tax implications. The list of circumstances that can potentially have tax implications is quite long. Divorce is one of the things on this list.
Among the divorce-related things that can have tax consequences for a divorcing individual here in Colorado is how exactly marital property is divided in their divorce. This is because certain types of marital property can have future tax liabilities attached to them. For example, some types of assets may expose a person to capital gains taxes. Thus, what types of property a person ends up receiving in a property division in a divorce could have some significant impacts on what their overall tax liabilities are.
Consequently, potential tax consequences are among the things it can be very important for divorcing individuals to take into account when making decisions related to the issue of division of property. Ignoring tax matters when it comes to property division could lead to a person ending up with a property division settlement that may seem fair at first glance but actually is not terribly fair when exposure to future tax liabilities is factored in.
Source: The Wall Street Journal, "Divorce and Money: Six Costly Mistakes," Veronica Dagher, May 15, 2015