On behalf of The Law Office of Gustavo E. Frances, P.A.
Think divorce laws are confusing now? Under President Trump’s brainchild reform, the Tax Cuts and Jobs Act, your Fort Lauderdale divorce attorney will work doubly harder for you. Not because you’ll suddenly accumulate more assets to divide, but alimony tax gets an unwelcomed facelift.
Currently, alimony paid can be deducted from taxes, but recipients pay taxes on funds received. Thanks to TCJA, payments received after December 31, 2018, will not be deductible, and receivers need not pay taxes on funds. Seems simple, except for court systems using software to leverage the previous 75-year old alimony laws. Those programs are now useless.
Paired with other tax confusions, alimony and divorce just got trickier.
Couples Will Divorce Smarter, Not Harder.
Mediators work with courts and spouses, sifting through mounds of income and asset reports to generate an acceptable alimony payment that equalizes both households. Spouses earning more generally transfer income to lower earners during alimony calculations, thereby affording higher earners bigger tax breaks. That’s how America’s current tax code works, at least.
New tax code changes could drive alimony payments through the ceiling, at least that’s what some believe. Mediation with an expert Fort Lauderdale divorce attorney could be trickier, or some couples may ‘bite the bullet’ and work through indifferences because divorce wouldn’t be fiscally feasible.
Another tricky component is alimony agreements modified in 2019. As laws go into effect on New Year’s Eve this year, some experts wonder if those agreements will be grandfathered into the updated tax code, or if new alimony payments will need to be calculated. Looks confusing on paper, but it’s really not.
For those in contentious relationships, either divorce filings will skyrocket, or they’ll decrease because the breadwinner won’t be able to afford alimony. Or, couples will adapt to new tax reformation and dissolve marriages smarter, not harder.
Considering Divorce? Know Your Income
Couples considering dissolution of marriage can avoid exacerbating outcomes simply by understanding their incomes. Where child expenses are, who’ll pay legal expenses to one or two Fort Lauderdale divorce lawyer firms, how assets could theoretically be divided to keep alimony payer from drowning and contemplating ways to cut unneeded expenditures.
Divorcees have the right to alimony, and those paying shouldn’t have to worry about affording it. Knowing household income and amicably resolving differences could assure upcoming TCJA rules don’t spin parties into an income regression.
Nobody wants to endure unfruitful relationships mired in controversy. If there’s no reconciliation within reach, parting ways on great terms could make an already difficult process less arduous. Although attorneys will have much better control over tax changes, it’s ultimate couples who decide alimony affordability through smarter choices and reasonable expectations prior to meeting with an attorney.
The Republican’s rough draft of TCJA would have enacted these confusing alimony tax rules in 2018. Final legislation signed by President Trump affords couples time to either work things out or begin their divorce process quickly.
Splitting up one blossoming marriage is tough. Retaining the experienced divorce attorney Fort Lauderdale divorcees counted on during tough times like yours can lessen a headache tenfold.