Little Known Aspect in Trump’s New Tax Plan Makes Huge Change to Decades Old Divorce Law
For the last 76 years there has been a law on the books stating that in a divorce there would be a tax deduction for alimony payments. Starting in 2019 however, because of new laws in Trump’s tax plan that deduction will be no more. In what is considered a surprise move by the administration this new change means that what was once a way to get ex-couples to agree on an alimony payment amount will be removed and more difficult negotiations over what amount will be paid to their spouse can be expected. In what many lawyers believe is a situation that will only make the process more difficult, they have told couples they are currently dealing with to get the divorce proceedings over with as soon as possible before the new laws go into place, rather than face the uncertain consequences of such a major change in a long standing law.
Taxes and Alimony
Divorces are very challenging. The couple who decides to end their union almost certainly is bound to have a bit of animosity, and deciding on the amount of alimony to be paid can be a significantly challenging situation. One of the few saving graces for the payor was that it could be deducted from their gross income on their tax return, but starting next year that will no longer be the case. What this means is that someone previously may have agreed to pay an amount of $4,000 a month in alimony knowing that after the old deduction they would only be paying $3,000. With the new law doing away with this deduction, they may now decide to pay their spouse $3,000 a month as they would no longer enjoy the tax benefit under the new agreement, this is a significant loss for the payee, whose financial stability depends on those alimony payments.
The new law is gender neutral but the facts show that women are typically the lower earners in a marriage and in turn are the ones who end up receiving alimony payments. In other words, women who are getting a divorce are put at a bigger risk now that this deduction has been removed. It is often hard to agree on an amount for alimony. Now that it is a sum that is no longer deductible, the fight over the actual amount to pay will only be more difficult.
The new tax law raises other questions about how this affects all of the other aspects. Also, what if two people recently came to agreement of terms for their divorce before they found out about this new law change. No one knows exactly how these laws are going to play out once they go to court, especially because it is the first major change to the law in 76 years. This new process will clearly be something that needs to be figured out, but you can be sure it will be a complicated and messy road along the way.
Schedule a Consultation With a New Jersey Family Law Attorney
Whenever there are new tax laws someone needs to be knowledgeable enough to know how to navigate these issues in court. With the divorce process only becoming more confusing, you will want a qualified divorce attorney like Lois Garber Schwartz to handle your case. Contact the Law Office of Lois Garber Schwartz, Esq., today by calling 856-375-8989 or by filling out our online contact form to set up your free consultation.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.