If you’re facing a divorce in 2019 , you need to know that the new Federal tax act will have an impact on your case. Remember the old saying that in every divorce there are three parties: The spouses and Uncle Sam. It is very important that you have an attorney that understands at least the basics of divorce taxation and has the advice of a good tax professional in representing you in your divorce. The 2017 Tax Cuts and Jobs Act made the most sweeping changes to the tax code in over thirty years and every divorce may be directly affected beginning now.
One of the biggest changes in the tax code affecting divorce is the loss of the old provision allowing for an alimony deduction by the paying spouse and that alimony will no longer be included as income by the receiving spouse. This will make divorce financial planning much more important especially now that alimony will have to be paid from ‘after-tax’ dollars. Of course, the exclusion of alimony from the recipient’s gross income will be a financial boost to the recipient. All of these changes will have to be factored into any final settlement negotiations or trial presentation by the lawyers for both parties.
There are a number of other new tax changes arriving January 1, 2019 that must be considered when calculating alimony, child support and the distribution of marital assets and debts. In order to consider the financial implications of your divorce – long and short term- you should consult with legal counsel having the information at hand. We work with tax professionals to ensure that your settlement negotiations or trial preparation is structured around the most favorable financial resolution possible. No tax ‘stone’ will be left un-turned to secure the best possible result for you.
As a marital and family attorney for over thirty years and member of the United States Tax Court, I am pleased to discuss your issues with you and help prepare a winning financial strategy for you.