Many American households use at least one-half of their income to cover their bills. When couples divorce, it puts a significant strain on a family’s finances as that same income must cover two households’ bills. Once the Tax Cuts and Jobs Act goes into effect on Jan. 1, 2019, though, those families that have traditionally been supported by a single breadwinner may find that even more demands are being placed on their finances.
As things currently stand, any couple that divorces prior to Dec. 31, 2018, will be subject to old Internal Revenue Service (IRS) tax laws.
Any couple that files to end their marriage on the first day of the new year or thereafter will be subject to new ones. This means that spouses who are ordered to pay alimony will no longer be able to take deductions for their payments. This may push them into a higher tax bracket and cause them to have to pay more to the IRS this year. It may also leave them paying less child support.
If you’ve been considering filing for divorce, then there’s no better time than now to file, especially if you’re anticipating having to pay spousal support. By doing so before the end of the year, you’ll be allowed to continue taking your deduction. And, if you’re slated to receive alimony, then there’s no better time to negotiate your fairest offer than right now before the tax code changes.
While expediting your divorce may be ideal for some, it may not be in your best interest to do so. It may prevent you from meeting your long-term financial goals. Your attorney will take into account how much income you make, the number of assets that you’re expected to retain and how much in monthly expenses you have before letting you know whether it’s the best decision for you to expedite your divorce.
If you two are ready to move forward with your divorce, but you and your ex are unable to reach an agreement about alimony as the deadline nears, then you may need to consider other tax-savings alternatives that will allow you to settle in the new year. A Westerville divorce attorney who is committed to helping you maintain your quality of life can help guide you through your spousal support negotiations.