During the process of a Pennsylvania divorce many aspects of your life change and be impacted. The main change is of course your marital status, but there are many other things will be impacted as well, including your taxes. In today's blog, your Western Pennsylvania divorce lawyers explain some of the implications your divorce may have on your taxes and includes some advice posted onto a recent article on Forbes.com.
If you are considering filing for divorce of have just filed for divorce, you have a lot on your mind. It's very possible that taxes is certainly not one thing that has your worried, but it could have a big impact on your post-divorce life, so it is definitely something you should think about. And though you may want nothing to do with your soon to be ex, this is a conversation you should certainly consider having with him or her.
The various ways in which a Pennsylvania divorce can impact your taxes include:
• Filing status
• Claiming dependents
• Child Support
• Medical Expenses
• 401(k) Accounts
Regarding filing status, you can file your 2014 taxes as married if you were still legally married at the end of the year. Once you are divorced you can file the taxes in 2015 as single head of household. Directly connected with this filing status comes dependents. If the children live with you for more than half the year, you can claim them as dependents. However, there are many times in which couples agree to alternate claiming the children as dependents.
Other expenses that are typically resolved during divorce proceedings are the children's expenses. The parents will be ordered to pay child support and medical expenses. Regarding child support, the parent who receives the money from the other must pay taxes on this income. In terms of medical expenses, unless otherwise agreed, the parent who pays these bills can claim those as his or her expenses.
Another impact divorce can have on your taxes is with regards to spousal support. Whether it is via monthly alimony payments or a lump sum payment from a 401(k) plan, these payments have tax implications for both sides. With alimony, the party receiving the money must pay taxes on that income and the one paying it will receive a tax deduction from these payments. With dividing a 401(k), considering the tax implications is a must. If you withdraw funds from this account you face a penalty and the sum is considered taxable income. In order to avoid being taxed you should create a Qualified Domestic Relations Order (QDRO) and discuss this option with your Pennsylvania family lawyer.
To learn more about the implications a PA divorce can have on your taxes or for legal guidance, contact our Western Pennsylvania family law attorneys at Lisa Marie Vari & Associates.