The tax overhaul put in place by Congress is set to reach out and touch every aspect of American life, including divorce and alimony. The 75-year-old standing tax deduction for alimony will disappear beginning in 2019, and the new legislation was recently signed into law. In Georgia and all other states, the new ruling will not affect those who begin divorce proceedings or have signed separation papers before 2019.
Experts agree that divorce negotiations will be more stringent and may lead to less spousal support. Divorces started after Jan. 1, 2019, will no longer be eligible for a tax deduction under the new law, and the recipient of the payments will no longer be required to pay taxes on it. Under the current tax law, the deduction allows for more money to be divided between spouses, empowering them to live independently.
A person paying 33 percent in federal taxes on income, pays and deducts $30,000 a year in alimony, and ends up with a $9,900 tax savings. This would make alimony payments more manageable under the current plan. The Internal Revenue Service records show that 361,000 taxpayers paid a total of $9.6 billion in spousal maintenance in 2015, but only 178,000 reported receiving it. The IRS has been working to improve its methods for dealing with the discrepancies since 2014.
One of the most challenging times in a person's life is coping with the stress of divorce. In Georgia, those who are attempting to navigate the divorce process may benefit from contacting an experienced family law attorney. A knowledgeable lawyer can answer questions and provide guidance throughout every stage of the proceedings.
Source: nypost.com, "Here's how the tax plan could change divorce in a big way", Dec. 22, 2017
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