The Trump tax plan has significant changes that could affect couples that are planning to get divorced. In the past, alimony payments were tax deductible for the person who paid and counted as income for the former spouse who received the payments. That arrangement offered tax benefits to both spouses and gave the spouse who earned more money the chance to negotiate for more property while possibly not losing anything at tax time. It’s important for anyone planning to get divorced in the future to plan appropriately. The new rules take effect January 1, 2019.
What to Expect in 2019
Couples who get divorced starting in 2019 will not get any tax benefits related to alimony. High-earning spouses who have alimony as part of their divorce settlement will not get to reduce their taxable income by deducting alimony paid by the court. A spouse who receives alimony through a divorce settlement after January 1, 2019 will not get to add to their taxable income and receive potential tax benefits. An Alimony Lawyer in New Market who has been skilled at using alimony as a negotiating point may have to rely on new tactics to keep their clients out of litigation.
Other Ways to Negotiate
With alimony no longer being an attractive negotiating tool for a high-earning spouse, an Alimony Lawyer in New Market might offer property or one-time cash payments instead. Although these options may not give the other spouse an ongoing source of income, accepting cash or property might be more financially appealing than paying thousands of dollars for litigation. Visit Russellandheffner.com to get in touch with an attorney who has a variety of tools in their divorce arsenal.
Divorce negotiations are rarely easy. People have to divide the things they worked hard over many years to obtain. Without the tax advantages alimony used to offer, high-earning spouses may have to give up other property or part of their retirement accounts to settle their divorces. While this might not be an ideal situation, it may help a couple avoid the expense of litigation. Any costs associated with litigation comes from the assets the couple is able to divide among themselves.
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