What can the IRS tax during divorce?

On Behalf of | Apr 8, 2021 | High-Asset Divorce |

What are the biggest threats to your future after divorce? The first would probably be a spouse that wants more than a fair share of the marital estate.

Divorce is complex in part because you get an opportunity to secure your post-marital life. One thing most high-asset couples focus on is taxes.

Divorce tax concerns

As explained by Kiplinger, the IRS is often a major factor in asset division during divorce. That includes some of the special income that you get during and after your divorce.

In general, your strategy would probably be something along the lines of balancing tax burden across both sides. However, when emotions run high, it is easy to lose sight of these types of details.

High-tax assets

Nearly every one of your assets could represent a tax burden — especially if you liquidate — but there are some that could make a bigger difference than others. At the top of that list is your family home.

If you have a relatively high income, then you probably exceed the value for your home sale exemption. You might even have a home that is worth more than the married exemption, which is double the personal one.

You might also want to consider taxes on selling securities. Depending on the market conditions and the original cost basis of your portfolio, your net could be far less than it would be if you received a cash bank account of similar value in your divorce

It is not all asset-specific: You might find some general benefits, too. There are several potential risks to your personal property during divorce. Focusing on your taxes could help you minimize those risks through careful strategy, attention to detail and collaboration with your spouse.