Divorce Tax & Debt Issues

Divorce can be complicated, especially when it comes to financial and tax issues. When faced with the difficult emotional aspects that tend to accompany divorce, many people fail to consider that matters related to debts and taxes must also be addressed. To avoid being hit with a large tax bill or saddled with unexpected debt, you need to understand how debt is divided in divorce as well the possible tax consequences of certain divorce-related decisions.

For nearly three decades, Deborah Zitomer Esquire, LLC, has assisted individuals throughout the Norristown area, who are going through divorce, address debt and tax issues.

Avoiding Tax Problems Related To Your Divorce

Almost any aspect of a divorce settlement or judgment can have tax implications.

  • Spousal support / alimony — The IRS treats alimony or spousal support as taxable income for the receiving spouse, whereas alimony is usually tax deductible for the paying spouse.
  • Child custody — Decisions related to child custody may affect which parent can claim a dependent child as an exemption on their tax return.
  • Sale of property — Investment liquidation or the sale of the family home or other business can result in capital gains taxes in certain circumstances.
  • Retirement accounts — Tapping into a 401(k) or retirement account too early can result in penalties and taxes.
  • Business ownership — When one or both spouses had a business during the marriage, is can be important to deal with issues regarding any outstanding employment, sales and business income taxes. Divorcing spouses should also consider the possibility of future tax liability related to a family business or commercial investments.

Addressing Debt Issues In Divorce

Financial problems related to debt can put a lot of strain on a marriage and are often a major or contributing factor in a divorce. Unfortunately, even if the majority of your debts relate to purchases made by a spouse, you may be liable for their repayment. When it comes to how debts are divided in divorce; factors related to when the debt was accrued, the type of debt and both spouse's responsibility for a debt's repayment must be examined.

If you are planning to file or learned that a spouse recently filed for divorce, contact our law firm today or call 610-879-8473.