Which financial document is crucial for assessing income during a divorce settlement?

Tax returns are crucial for assessing income during a divorce settlement because they provide a comprehensive view of an individual's financial situation. They typically include information on various sources of income, including wages, dividends, and investment income, as well as details about deductions and tax liabilities. This documentation is often used to verify reported income and assess earnings accurately, ensuring that both parties have a fair understanding of financial contributions and obligations.

Tax returns also provide a historical snapshot of income over multiple years, which is valuable for determining any potential fluctuations in earnings. In divorce settlements, having clear and documented evidence of a party's financial capacity is essential for equitable distribution of assets and determining spousal or child support obligations.

While bank statements, credit reports, and investment portfolios can provide additional insights into a person's financial standing, they lack the comprehensive and structured income information that tax returns offer.