Sweeney Law Offices, LLC
We Are Here To Help
724-390-4464 Or 866-540-4180
Menu Contact

How will tax rules affect your finances after divorce?

Divorces and separations are governed by specific tax code rules that may have a significant impact on the finances of Pennsylvania residents, especially if there are children involved. It may be appropriate to obtain the relative information when settlement discussions take place. With the guidance of an experienced divorce attorney, settlement can be structured in a way that will benefit all parties.

A custodial parent is allowed to claim a dependency exemption, which is a predetermined amount per child. However, the custodial parent may give consent for the non-custodial parent to claim this exemption. There are specific IRS forms to be filled out by the custodial parent to confirm his or her consent. These release forms have to be attached to the non-custodial parent's tax return. Even if the custodial parent releases the dependency exemption, he or she may still be put in a lower bracket of tax liability by filing under the Head of Household status.

Additional benefits that the parent with custody may qualify for include Child Care Credit, Earned Income Credit, and Exclusion for Child Care Benefits. It is not uncommon for a non-custodial parent to claim dependency exemption without prior consent of the custodial parent, and resolving this afterward may be tricky. To avoid that, it is recommended that the custodial parent who wants to claim the exemption does not delay filing his or her tax return. If a second claim is submitted, it will be rejected by the IRS.

Child support has no impact on taxes, as it is not classified as taxable income to the parent receiving it, and it is not deductible to the paying parent. However, alimony or spousal support is regarded as income and subject to normal tax rates, and the person who pays alimony may record the payment as a deductible expense. There are specific rules to comply with, as the IRS will compare the respective income and expense recorded by the two parties. In fact, all these elements may be best discussed with an experienced professional to ensure proper procedures are followed. Our Pennsylvania divorce website may provide additional information on tax rules for divorce.

Source: Fox Business, "Taxes and Divorce, What You Need to Know", Bonnie Lee, Dec. 16, 2014

No Comments

Leave a comment
Comment Information
Nebraska State bar association Allegheny County Bar Association - RAising the bar on legal and community service Superlawyers 2012,2013,2014,2015 Avvo Rated by Super Lawyers - Mildred B. Sweeney Selected in 2012 Thomson reuters Rated by Super Lawyers - Rising Stars Flora Sweeney Hunzeker Superlawyers.com Rated by Super Lawyers - Rising Stars Heather M. Papp - Sicignano Superlawyers.com Pennsylvania bar association

Sweeney Law Offices, LLC
20581 Route 19, Suite 1
Cranberry Township, PA 16066

Phone: 724-742-2590
Fax: 724-742-4409
Cranberry Township Law Office Map

Speak With One Of Our Attorneys

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

email us for a response