Economics have been a factor in keeping many couples from divorcing who might otherwise have split up sooner. For those who do divorce, though, economic factors will still play a part in their lives. For one thing, divorce has wide-ranging effects on the divorced spouses’ taxes.
The following are some tax issues that commonly arise in divorce cases:
Child support is tax neutral – alimony is not
Child support is tax neutral, which means that it does not affect your taxes positively or negatively. Since spousal support, or alimony, is deductible (see below) Pittsburgh child support attorneys find that there is an incentive for one ex-spouse making payments to another to be able to classify those payments as alimony. It is a consideration to keep in mind when negotiating a divorce settlement. This situation is also going to be relevant to commitments to pay for college education: those payments are going to be tax neutral.
Paying alimony helps on your tax return
If you are the spouse who is paying alimony, those payments will lower your tax bill. The deduction is an “above the line” deduction, meaning that you can still get the deduction even if you opt not to itemize.
If, however, you continue to live with your ex-spouse for some reason, the alimony payments made during that time of cohabitation will not count as a deduction on your taxes. This is another factor to keep in mind in your negotiations.
Source: TIME “Divorce and Taxes: Five Things You Need to Know” 4/6/2011