The recent tax law changes have been a constant in the news lately. While we may not know exactly how those changes will affect us, one change stands out that could have an impact on divorces filed after these changes take place.
One new tax law wipes out the previous alimony deduction that has been in the tax code since 1942. The new law states, in effect, that spouses who pay alimony will not be able to take a deduction for those payments, while spouses receiving alimony will not have to claim the monies received as income. This could lead the spouse who would have to pay alimony to negotiate-or attempt to negotiate-for a much lower payment since it will no longer be tax deductible. This could have a major effect on the spouse that receives alimony, as that spouse generally relies on those payments to maintain their standard of living. These negotiations could also have an effect on the length of the divorce process as well as the cost.
These changes could also push couples that are on the brink of separating into a divorce to avoid having to be under the new tax law. Another aspect that could be affected by this new change are prenuptial agreements that would or already have a set amount of alimony laid out in the agreement.
If you have divorce questions, or questions about how this new law could affect your current situation, contact Hodges Trial Lawyers.