How Will the New Federal Tax Law Change Divorce?
If you and your spouse are considering getting a divorce in the near future, you both will need to know about a few new federal tax rules. The Tax Cuts and Jobs Act has made it so that a taxpayer will not be able to deduct alimony payments made to an ex-spouse. Also, whoever is receiving that money will no longer pay taxes on that income. These new regulations apply to divorces that occur after December 31, 2018. If you have alimony payments, you should try to finalize your separation before then.
How Will the Tax Cuts and Jobs Act Affect California Couples Interested in Divorce?
California, among other states, require a six-month waiting period before a divorce can be officially finalized. This means if you have filed divorce papers after June 31, 2018, your divorce will not be finalized by the impending deadline. If this is your situation, it is imperative you speak with an experienced divorce attorney so you will understand your rights under the new law.
Alimony, also known as spousal support, is money that is paid to a spouse or former spouse after a divorce or separation. Alimony’s purpose is to help maintain an ex-spouse’s standard of living after the separation. In California, alimony payments usually last for half of the marriage unless the couple has been married for at least a decade, in which case the payments last for life.
If you get divorced before December 31, your whole family will pay less in taxes to the federal government and have more money in general. This deadline also creates another interesting opportunity for lump sum payments. This means that couples can go for one large one-time payment instead of choosing alimony payments that could continue indefinitely. This can present its own challenge for the spouse paying the lump sum who will need to find a large amount of money quickly.
If you are interested in divorce and would like more information on how the Tax Cuts and Jobs Act will affect you, you should speak with a California divorce attorney. Contact our law firm today to schedule a consultation.