A Reminder of Upcoming Tax Changes That Will Affect Divorces
The clock is rapidly running out on 2018. As soon as the calendar flips, there will be some significant tax reforms that go into effect due to the Tax Cuts and Jobs Act that was signed into law in December 2017. As you may have heard, some of these changes to the tax code will have a significant effect on divorces.
Below are a few of those changes that could play a role in divorce cases in 2019 and beyond:
- Alimony: Alimony payments will no longer be tax deductible and alimony received will no longer be classified as taxable income. This could make for some uglier divorces, as the tax-deductible nature of alimony soothed some of the sting of the higher-earning spouse in the divorce. Now, the lack of deduction could be seen as an extra penalty.
- Modifications: If you finalize your divorce before the end of the year, you will be grandfathered in to the old rules. However, if you modify your divorce agreement at any time in the coming years, those modifications could be subject to the new rules under the Tax Cuts and Jobs Act. Thus, you may need to exercise care when making any modifications.
- Child deductions: Children will not provide the same tax deductions as in the past. Specifically, there will no longer be a $4,050 exemption for every dependent. However, the child tax credit that results in an offset of owed taxes did double from $1,000 to $2,000. The child deductions often arise during divorce proceedings.
For more information and guidance on how the changes to tax code could affect your divorce, speak with an experienced Long Island family law attorney at Bryan L. Salamone & Associates.