Allocate Income and Deductions
One of the goals of divorce proceedings is to divide marital property between the spouses. Along with the division of assets and the assignment of debt, issues involving the allocation of income and expenses (deductions) must be resolved as well. For example, division of interest and dividends on jointly held assets must be discussed, as should the deduction for real estate taxes paid. And allocations of tax carryovers--although sometimes overlooked--are an especially important tax issue related to divorce. Carryovers frequently take the form of losses that could not be used (deducted) in a given tax year and are available for use in future years.
To aid parties and their attorneys to uncover all items of income, debt, expenses, and assets, it's necessary for each spouse to complete a financial affidavit and to participate in the discovery process. A thorough understanding of the rules regarding the division of debt is also helpful to divorcing spouses.