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Taxes and Pennsylvania divorce: Pay attention while negotiating

Pennsylvania divorce negotiations typically involve a wide range of issues. As a couple negotiates the dissolution of their marriage, topics such as property division, spousal maintenance, child custody and support are addressed. One issue that sometimes plays second fiddle to these divorce discussions is the tax consequence of each decision made.

One frequently asked question is whether a divorcing couple may file a joint tax return. This is an issue of particular importance to many Pennsylvania couples, as the ability to file a joint return may result in additional tax savings. The answer depends on the date that a final divorce judgment is signed. As long as the divorce judgment has not been signed by the last day of the year, the couple is entitled to file jointly for the entire year, even if they were already living apart. If, however, the judgment is signed on Dec. 31 or earlier, the couple is deemed divorced for the entire year and may not file a joint return.

Child support and spousal maintenance is another area of importance when it comes to taxes. Child support is typically paid by a non-custodial parent to the custodial parent for the benefit of any minor children. It is not tax deductible for the person paying the obligation, nor is it considered taxable income for the person receiving it. Spousal maintenance, or alimony, is tax deductible by the payer and also considered income for the person receiving it.

As we've discussed before, tax consequences are a crucial part of Pennsylvania divorce negotiations. Failing to consider the tax ramifications of decisions made during the marital dissolution process could have a substantial impact after the proceedings are completed. The right advice may help those involved reach informed decisions that both protect their individual interests and work toward achieving an equitable divorce settlement.

Source: The Orange County Register, "Tax decisions can be overlooked during divorce," Patrick Harper, Sept. 17, 2012

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