Pennsylvania couples who are considering a divorce in the next few months will likely be affected by the federal Tax Cuts and Job Act that was recently enacted. Anyone involved in a high asset divorce will likely have to contend with the effects of the changes with how alimony will be taxed. Prior to 2019, alimony was tax deductible for the payor and taxable income for the payee. The new tax law has changed it up and the payor will now not be allowed to deduct any paid alimony from taxes, and the payee will not have to pay taxes on any alimony received.
Someone considering a divorce may immediately begin to have thoughts about who will get the house and custody of any children and/or pets. In addition to the basic items that must be separated, retirement accounts often are a central part of the negotiations between spouses. Retirement accounts are often shared and are often the largest source of wealth for a couple, often making them the biggest assets to separate. Unfortunately, the new tax laws have complicated the funding of retirement accounts, but the right family law attorney may be able to suggest a solution that is agreeable to both parties.
Social Security benefits can also be affected by a divorce and/or remarriage. If an individual is divorced and remarries before the age of 60, it may impact the options for Social Security benefits. After the age of 60, the impact may be less significant. Because of the complexity, an individual may find it best to consult an attorney concerning these issues.
When beginning the process of considering a divorce, an individual will likely wish to understand the three processes in which they can legally achieve their high asset divorce. Pennsylvania family laws attorneys can explain the cost differences and process between mediation, collaborative law and traditional litigation. Typically there is a cost and time difference between all three, and individuals prefer different methods based on their needs.