Greensburg Divorce Tax Matters Lawyer
When couples choose to end their marriage, there are a lot of decisions that must be made. Some of these include property distribution, child custody and support, and alimony. While people are typically thinking about their ideal arrangement, they fail to consider the tax implications of a divorce. Numerous tax issues can arise during a Pennsylvania divorce, which is why you need to hire an experienced Greensburg divorce tax matters lawyer.
The attorneys at Bunde & Roberts, P.C., have over 100 years of combined experience helping clients just like you. We understand that many couples fail to think about tax implications before dividing property and finalizing their divorce. We can advise you on many legal issues, such as determining spousal responsibility for tax payments, allocating potential refunds, and assigning a net after tax-value to some marital assets that will be distributed.
Should You File Taxes Jointly if You’re Getting a Divorce?
Many clients ask if they should file a joint tax return with their spouse if they are divorcing. The answer will depend on each couple’s specific circumstances. There are some concerns and potential drawbacks if you do file jointly. What if one spouse omits income or reports other fraudulent information. Since you signed the joint return, you could be liable for the amount owed.
We frequently analyze whether a couple should file joint tax returns. If you opt to file jointly, we can help mitigate any risks. For example, we could draft and negotiate tax indemnification agreements that each of you signs before filing any tax returns. We can also assist with negotiations on allocating tax refunds or tax liability.
Certain types of property distribution can cause tax concerns as well. Some assets have deferred taxes, like a traditional IRA. A traditional IRA usually is taxed in the future when payments are made, and it’s at the tax rate of the owner at the time of payment. When distributing an IRA, not considering the future taxes means the recipient spouse will be facing an unexpected tax bill.
Alimony, Spousal Support, and Child Custody
Recent changes in the tax law affect payments like alimony. Before 2019, alimony payments were tax-deductible for the payor spouse, while the recipient spouse had to claim payments as income. In 2018, the Tax Cuts and Jobs Act (TCJA) eliminated the payor spouse’s deduction and the requirement to claim it as income for the recipient spouse.
The TCJA also altered tax exemptions for parents. Prior to it coming into law, the custodial parent could typically claim a dependency deduction on their returns. Those exemptions have been eliminated as well. In exchange, the child tax credit has increased from $1,000 to $2,000.
Count on Experienced Guidance from Our Greensburg Divorce Lawyers
At Bunde & Roberts, PC, our Greensburg divorce lawyers have the skills and experience necessary to help you make essential tax decisions. We will work with you to find the right approach based on potential circumstances. To learn more about how we can help, contact Bunde & Roberts, P.C., today at 412-391-4330 to schedule an initial consultation.