Cryptocurrency has become an increasingly difficult factor in Florida divorce settlements. This is largely because dogecoin and bitcoin, as well as other types of cryptocurrency, are gaining popularity and increasing in value.
Over 20 million people in the US may own cryptocurrency, and the digital currency market value increased to $2 trillion for the first time in April 2021. Whether couples invested large amounts of money or dabbled in cryptocurrency could make property division more complicated in a divorce. If you live in Florida, here are some important things to keep in mind concerning asset division.
The validity of cryptocurrency
Cryptocurrency can be tricky when it comes to assessing the value. For instance, digital currency that is worth $200,000 could be reduced to $100,000 or go up to $400,000 during a divorce. Some spouses may prepare for the end of their marriage by adding a volatility formula into their divorce contract to ensure that the cryptocurrency split is fair. So if the value of cryptocurrency changes by a certain percentage, there may also be a similar change in other forms of property division.
Tax considerations
Taxes are another important aspect to consider when it comes to property division. If one spouse purchased bitcoin five years ago, the currency value may have grown. This means the spouse will have to deal with capital gains associated with the cryptocurrency if they sell it. When couples are negotiating a divorce, it is best to factor in their tax bill after divorce.
Divorcing couples may run into additional financial issues if one spouse did not report income from cryptocurrency to the IRS. If the IRS comes back with questions about the former couple’s finances, this could have a negative impact on couples who filed jointly when they were married.