The sick reason many miserable married people are pondering divorce in 2018
Source: www.moneyish.com
The sick reason many miserable married people are pondering divorce in 2018
Divorce, like marriage, is taxing.
The sweeping new tax law that President Donald Trump signed in December could soon make paying alimony more expensive for some members of the roughly 800,000 couples getting divorced each year, according to government data. And divorce attorneys say that’s spurring a spike in clients considering divorce this year, thinking they might want to get it done before the new alimony provision takes effect in 2019.
“The people who have been on the fence, now knowing the tax law is coming into effect, is causing them to take the plunge. We have been getting plenty of calls [from them] …,” says Adam D. Citron, senior counsel at New York-based Davidoff, Hutcher & Citron. “For many this was the final nail in the coffin.” Across the country in California, Jennifer Riemer, a partner in Walzer Melcher, is seeing the same thing. The alimony change has “definitely had an effect,” she says. “Clients who are even a little bit financially savvy have been asking about it.”
To understand the new alimony provision, first, you’ll need to understand how alimony is currently treated for divorced spouses. Currently, the person paying alimony or spousal support may be able to deduct those payments from their taxes. Riemer gives a simplified example to show how much that could benefit the person paying alimony: “Let’s say you pay $20,000 a year in spousal support and are in the 33% tax bracket, the deduction will save you $6,600 per year.”
The new tax law will change all that. Beginning in 2019, if your divorce settlement is finalized in 2019 or later, you will no longer be able to deduct those alimony or spousal support payments from your taxes. In other words, by 2019, “the payors lose out on the tax deduction,” explains Citron — and that could mean that “the payor’s cost of paying alimony or spousal maintenance will be substantially higher.” Meanwhile, those who finalize their divorce in 2018 will get to deduct their spousal support and alimony payments for the entire time they are required to pay them. (On the flip side, divorce lawyers dealing with settlements in 2019 and beyond will think about the new tax implications and try to lessen their clients’ alimony payments to reflect that they aren’t tax deductible.)
These new rules also impact the person receiving the spousal support and alimony. While people who get divorced this year and get spousal support will have to pay taxes on it, those getting divorced in 2019 or later won’t, Riemer explains. She says this this could mean that the spouse who will be getting the spousal support “might slow play the divorce.”
How the Law Office of Scott A. Ferris, P.A. Can Help
If you, a friend or a family member find themselves in a situation such as this, please call the Law Office of Scott A. Ferris, P.A. at 305 670-3330 right away. Scott A. Ferris, Esq. is a licensed family attorney who has been practicing law since 1987. He is available whenever you need him to defend your rights. Please learn about our firm at www.FerrisLawFirm.com.
Republished by the Law Office of Scott A. Ferris, P.A.