The standard rule in Pennsylvania regarding the tax treatment of alimony payments in a divorce is that payments made by the payor are tax deductible and that payments received by the payee constitute taxable income. However, there is an important caveat to this rule. The U.S. Tax Code only permits alimony to be deductible if it is specified in a written order or property settlement agreement.
As divorce and custody litigation progresses, the parties inevitably reach tax season and must determine which parent gets to claim the child/children on their taxes if they are separated, divorced, or were never married. I frequently have clients asking which parent should be entitled to claim the child/children on their taxes. Unfortunately, there is no concrete answer as it should be determined on a case by case basis. Because of this, it is important to have your attorney investigate all of the issues in your case and advise you accordingly.
With the end of the year just past and tax season on the horizon, an important issue that I encounter regularly in my family law practice revolves around which spouse is permitted to claim the child or children on their taxes.
In the last post, we started to look at some of the tax situations that arise in divorce. Now we continue that discussion with some more things to keep in mind during divorce negotiations, and after.
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.