Post-Divorce Financial Issues to Be Aware of This Tax Season
A number of complicated issues can arise both during and after a divorce, and if the matters aren’t appropriately addressed and resolved, the problems can continue for years after the divorce is final. With tax season in full swing and the April 15 deadline fast approaching, it is important for couples who may have made the decision to part to understand the financial issues that should be addressed during the divorce process to help avoid problems in the future. Marketwatch.com offers these thoughts:
- Family support: A divorce document should clearly define the nature of “family support” because for tax purposes this phrase doesn’t mean anything. An audit may be in a former pair’s future if one spouse treats the family support as alimony (which is deductible for the payer), while the other treats the payments as child support.
- Deducting of legal fees: A divorcing couple may be able to deduct hefty legal fees; in general, legal fees for divorces are not deductible, but fees related to protecting or fighting to get income-producing assets are deductible. The divorce attorney should provide a year-end summary of charges outlining total billable hours and costs for each area of dispute so the deducting of certain fees could survive an audit.
- Exemptions and filing status: Deciding on which spouse will get the exemption for the children or the head-of-household filing status can be done more easily with the help of a tax professional. A tax pro can educate a couple on how to ensure each person gets the appropriate claim on his or her tax form and can arrange to have the divorce agreement include the right elements.
- Splitting assets: Though the assets of a couple may seem to have been divided equally, one can end up with all the tax liabilities while the other can get the assets that are completely tax-free. This is an important issue to discuss with the divorce attorney and/or a tax professional to ensure assets are fairly split.
These are just a few of the tax-related issues to be aware of following a divorce, so it is important to seek the help of an experienced Pennsylvania divorce financial and tax issues attorney to avoid future financial fallout from the split. Sheryl R. Rentz has extensive experience aiding divorcing couples and helping them discuss and resolve finances and asset division. To discuss your case during a free consultation, please call (610) 645-0100.