Spouses in the process of a divorce may need to worry about federal and Pennsylvania taxes. Proper planning in the agreement and leading up to it may either reduce or eliminate that burden. This is why it is essential to get professional help in the divorce process.
A spouse in the middle of a divorce is understandably distracted by the major decisions surrounding the dissolution of their marriage. They may not be thinking ahead to the tax ramifications of what happens, which could lead to a capital gains tax burden on certain asset sales. It may also mean that the spouse gets an asset in the divorce that has a built-in tax obligation while the other spouse avoids it by getting cash. Moreover, there are also issues surrounding the tax filing when the couple is in the process of getting a divorce. Finally, taxation of alimony is also a concern as the 2017 tax law changes altered the way that alimony is taxed. Now, the spouse who pays alimony loses it as a tax deduction while the receiving spouse is relieved of their obligation to pay taxes.
Many times, it is only after the bill comes due or taxes get filed for the first time post-divorce that a spouse realizes this. Being caught unaware can harm their financial future after the divorce.
A divorce attorney may be able to point out issues such as these when they are helping their client negotiate the divorce agreement. They are aware of how taxes impact these assets and may help their client reach a solution that does not leave them with an unexpected tax bill after the divorce is final. It could be difficult for a spouse to stay focused when their life is changing, so an attorney might assist in this area.