Arizona. Divorce lawyers across the country are preparing themselves for 2019.
Why? In 2019, tax reform laws regarding a tax-savings alimony deduction will
change. According to the Chicago Tribune
, starting in 2019, divorcing
individuals will no longer be able to deduct their alimony payments from
taxable income. In current divorce settlements, the alimony deduction is an
important “carrot” that can encourage spouses to agree to pay alimony. However,
starting in 2019, this won’t be available. Divorce lawyers are worried that the
loss of the alimony deduction could make divorces more acrimonious.
current law, a person paying alimony can deduct that amount from his or her
income taxes. The spouse receiving alimony (usually the person in the lower tax
bracket) then pays tax on the alimony received. However, under the changes to
the law, the spouse paying alimony will have to take alimony from their
after-tax income, meaning that they won’t enjoy the benefit of paying a lower
tax rate. The alimony payer ends up paying more, and the person receiving
alimony is likely to get less because payers will argue that they cannot afford
critics of the new tax law claim that this change hurts women. Women may be
more likely to receive alimony from a spouse because they are most likely to
take time away from work to raise and care for children. They may also be more
likely to provide crucial financial support to help their spouse further their
career. Women may have less income as a result and alimony balances the scales.
However, without the tax break, exes may be less likely to pay more in alimony,
leaving women with a greater loss of income.
The Chicago Tribune
reports that alimony
formulas may need to be rewritten as a result of the tax change. Essentially
the tax reform makes it so that both parties will have less money to divide,
, the changes to tax law may make
it so that some households simply may not be able to afford to divorce. Others
worry that tax reform will hurt women who may be less able to put away money
for retirement if their alimony payments are smaller.
news is that couples who already benefit from the tax break won’t lose it. The
bad news is that couples who get divorced in 2019 will lose the benefit of the
tax break. The solution? If you are thinking about getting divorced, now, while
the tax break is still in effect, might be the best time to do so.
Schneider & Onofry, P.C. are
divorce lawyers in Yuma, Arizona
who work closely with individuals who are planning to get divorced. Our firm
can review your financial situation and help you and your former partner
develop a plan that works best for your family. In some cases, this may involve
alimony payments. If you think alimony may play a factor in your divorce, don’t
hesitate. Contact our firm today. Visit us at https://www.soarizonalaw.com/
to learn more.