Divorces may become even More Costly for Some People
Divorce lawyers and financial planning advisers across the country predicted a rush of divorces, particularly among wealthy couples, before the end of the year. The reason? The Tax Cuts and Jobs Act, signed into law in December 2017 by President Donald Trump, made changes to the tax laws that will have a significant effect on divorcing couples. As a result, a divorce could cost wealthy individuals paying alimony even more money.
Under the previous system, those paying alimony could deduct alimony payments on their income tax returns. And those who received alimony were required to report those payments as taxable income. For divorce or separation agreements reached on January 1, 2019, or later, however, those rules have changed.
What to expect out of the new alimony rules
Under the new law, the tax deduction for alimony payments will be eliminated for all divorces finalized after December 31, 2018. Meanwhile, alimony recipients will no longer be required to report the support payments they receive as taxable income.
This could be especially significant for high-income individuals, who previously could benefit from significant tax savings by deducting their alimony payments. In this sense, divorces are about to become costlier than ever for some people.
Proponents of the change say the previous rules unfairly punished married couples who did not have access to these extra tax breaks of their own by virtue of staying together. However, opponents say it adds an unnecessary stressor and financial burden to what can already be a messy and expensive divorce process.
If you need skilled legal representation for your divorce or family law matter, meet with an experienced Florida attorney at Oberliesen & Henderson. Contact our Shalimar office online or by calling (850) 863-0494.