Tax considerations for divorcing couples

Divorcing couples in Pennsylvania and around the country are often primarily concerned about matters such as property division, child custody and spousal support, but they may be wise to also consider the tax ramifications of ending a marriage. The implications of decisions made during divorce negotiations can persist long into the future. One of the most important of these decisions is choosing whether to sell or divide jointly owned assets.

Spouses who have developed emotional attachment to assets may choose to offer property in exchange for them during divorce negotiations, but this can result in hefty capital gains tax bills if they choose to sell the assets in question at a later date. Spouses who receive alimony as part of their divorce settlements should be aware that they will be required to pay income tax on this money. In addition, spouses who pay spousal support are able to deduct these payments on their personal income tax returns.

While custodial parents are usually able to claim their children as dependents when they file their taxes, this deduction may go to noncustodial parents if a waiver is signed. Noncustodial parents are also able to deduct any medical bills they pay for their children. The Internal Revenue Service considers the parent that children spend most of the year with as the custodial parent, and they are able to claim the American Opportunity higher education credit and the child credit as well as listing their children as dependents.

Experienced family law attorneys may go over the tax implications of divorce at length with their clients, and they may also remind them to change their tax filing statuses once their divorces are final. While the sentimental value of some marital assets can be high, attorneys might urge their clients to take a more dispassionate approach to property division negotiations.