U.S. Tax Law Changes Affecting Divorce Now in Force Since Jan. 1

By  //  January 4, 2019

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New tax law changes introduced at the New Year now complicate divorce proceedings for many Americans, twisting the knife for couples who’ve called time on their marriage.

New tax law changes introduced at the New Year now complicate divorce proceedings for many Americans, twisting the knife for couples who’ve called time on their marriage.

Divorce is a difficult time for any ex-couple, but today the statistics show promising progress in the United States when it comes to marriage itself.

The divorce rate has been diving down for some time, due to people waiting longer to get hitched, and that they seem to be more committed to their vows than past generations.

Between the years 2008 and 2016, there was an 18% decline in divorces taking place across the country. Now, the new tax laws may just give struggling couples in 2019 an extra incentive to give things another shot.

The expert divorce lawyers will be taking on many clients until the New Year, as many rush to get divorced before negotiations become more convoluted than they ever were before.

After December 31, 2018, alimony, the process of paying legally binding provisional costs to a former husband or wife, will be significantly redefined. The payer will no longer experience alimony as a tax-deductible affair, nor will the transfer be taxable income for the receiver. Consequently, the proposition of a tax-free pay-out for the recipient is certainly problematic.

Essentially, this will risk bringing out the worst sides of both parties, butting heads more aggressively over the size of the pay-out, and ultimately heightening the stakes of the divorce process for either side.

Losing the crucial deduction will push many payers into a higher taxation bracket, meaning that they have less funds that they can afford to part ways with.

There will be those in unhappy marriages today eager for a divorce, but many partners will now wait for 2019 before proceedings kick into effect so that can dodge the federal income tax.

This will then enable them to seek a bigger settlement from the alimony, causing their partner to undertake a crippling financial loss in the process without the safeguard of taxation. It may also affect the reasons why people get married, such as those who get hitched to later exploit a wealthy partner for their funds.

In the end, it raises the risk factor that comes with marriage, and can leave those who may pay alimony feeling significantly more vulnerable than before these rules were put into effect.

Additionally, many of the partners seeking a fairer pay-out may find themselves short-changed too. Under these new tax laws, the payer will have extra incentive to offer less money, which means spousal support could dip down too in certain cases.

In the end, a great deal of the safety parameters around divorce have been removed, meaning in most cases someone in the process will lose out on more than they should.   

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