Complex Tax Issues in Divorce
As assets are being divided between divorcing spouses, it is important that the tax implications of the division are also evaluated. The divisions of property and the allocation of support can have a significant impact on the future finances and taxes of both spouses. At Cognetti Law Group, located near Harrisburg, Pennsylvania, we have more than 100 years of combined experience helping clients understand these confusing and overwhelming details. Our insightful guidance provides clients with a working knowledge of the potential tax ramifications in their particular case. For purposes of future tax planning and more complex tax issues, our attorneys have a working relationship with some of the most well-respected CPA firms and accountants in Pennsylvania. Such a working relationship allows us to thoroughly prepare cases, and our clients can be confident in knowing that they are getting the best and most thorough representation available.
Navigating Divorce Tax Issues
If you retain a particular taxed asset in the final divorce decree or settlement agreement, you may also take on the tax implications. For instance, if you must sell the asset later, you may be subject to the tax consequences of the sale, which could be substantial if you have not planned properly to reduce your tax liability. Because of this, if the court is evaluating the value of an asset, it may also consider the potential costs of sale of that asset. This is true whether the sale is pending and in the near future or if the sale is only a long-term possibility. Some common tax issues that arise during a divorce may include:
- Properly characterizing alimony in a divorce decree or settlement agreement
- Inclusion as income or deductibility of alimony and spousal support
- The alimony recapture rule
- Tax ramifications on division of assets
- Tax deductions for the children
- Sale of the house or homeowner’s deductions such as mortgage interest, home improvement loan interest, private mortgage insurance, and property tax deductions
Because of these potential tax implications, it is important that you are represented by an attorney who has the skill and experience necessary to present the court a comprehensive understanding of the true net value of each asset being divided. Your interests and financial future can quickly be compromised if all aspects of the division are not considered. To arrange an initial consultation to discuss how tax issues will affect your asset division, please contact our Cumberland County law firm today at 717-909-4060.