Pittsburgh Tax and Insurance Considerations for Support Lawyers
Tax Aspects of Pennsylvania Support Orders
If an individual is voluntarily paying a spousal support, APL or alimony order, there is no tax benefit to the payor and no tax burden upon the recipient. However, if a Pennsylvania family court order is entered, federal law as of January 1, 2018 states that the spouse receiving spousal support, APL or alimony pursuant to court order must treat the payments as income on federal tax returns and the spouse paying the order may treat it as a deduction from income for federal tax purposes. Federal laws regarding the taxation of alimony are scheduled to change as of the end of 2018. Please contact your tax advisor for more information.
As of January 1, 2018, if a spousal support, alimony pendente lite, or alimony order also contains an additional amount for child support, the entire amount received, including the child support component, may be considered income to the recipient for tax purposes unless the order of court states otherwise. Once again, the taxation of alimony is scheduled to change under the federal tax laws as of the end of 2018.
In Pennsylvania, it is presumed that an order for both spouse and child will be in an unallocated (not separately defined) order and that the entire amount paid will be deductible by the payor spouse on his or her federal tax returns. In addition to the amount for support, if the payor spouse pays any additional amounts for payment on the mortgage, health insurance, or unreimbursed medical expenses, these additional payments may also be considered as payments for alimony under federal tax laws until the end of 2018.
If an individual is paying or receiving spousal support, APL, or alimony, the best policy is to consult with a tax advisor to inquire whether the general rules outlined above are applicable to your specific situation.
Pennsylvania Orders for Health Insurance Coverage
In Pennsylvania, the issue of which spouse or parent should provide health insurance for the other spouse and/or children and whether the person carrying the insurance should be partially reimbursed for any costs associated with medical care is an issue that can be resolved as part of a claim for child or spousal support. However, when a couple divorces, the health insurance policy covering the family no longer covers the former spouse who is not the policyholder. Employer-provided health insurance plans will only cover the employee spouse after a divorce decree is entered by the court.
A federal law requires most employer-sponsored group health plans to offer the non-employee spouse the right to purchase continued coverage at group rates for as long as three years after the divorce. This coverage is often referred to as “COBRA benefits.” The divorced spouse of the employee must pay for the COBRA coverage at the employer’s cost, not the discounted employee rate for said insurance. The cost of obtaining health insurance for an unemployed spouse after a divorce is an item that should be considered in the equitable distribution or alimony process.
Contact Our Pittsburgh Divorce Attorneys Today
The attorneys at Lisa Marie Vari & Associates, P.C. are well versed in how tax laws impact PA family law ases. Contact our Pittsburgh divorce law firm, and speak with one of our experienced Pittsburgh divorce lawyers to learn the tax implications of your support or equitable distribution order. You can also reach us by telephone at 412-281-9906 in Pittsburgh, 724-536-5500 in Southpointe (Canonsburg), 724-776-9906 in Cranberry Township, 814-290-0587 in Clearfield County or toll free at 1-844-VARI-LAW (1-844-827-4529) .
Our PA family law office routinely accepts PA child support and PA spousal support cases in Allegheny County (Pittsburgh), Beaver County, Berks County (Reading), Butler County (Cranberry Township), Clearfield County, Lawrence County, Mercer County, Washington County, and Westmoreland County (Greensburg). To learn about the local county procedures in PA, click here.
We accept PA child and spousal support cases in other PA counties such as Armstrong County, Erie County, Fayette County, Greene County, Somerset County and Venango County on a case-by-case situation.