Settle Your Divorce Before the Alimony Tax Deduction Is Repealed
Spouses who are separated should act promptly to settle their divorce cases, before changes in the federal tax law make it more difficult next year. Back in December 2017, the U.S. Congress passed a law that makes sweeping changes in federal income tax. Many personal tax deductions have been repealed, including the right to deduct alimony from taxable income. The repeal of the alimony tax deduction affects divorce settlements and court orders that are signed after Dec. 31, 2018. Yet, if an agreement or order is signed before Dec. 31, the alimony tax deduction may be preserved for the duration of the agreement or order.
The alimony tax deduction has existed for decades. It creates a tax incentive for spouses to pay alimony. In many cases, there is not enough property or liquidity to allow both spouses to achieve financial stability after divorce. Alimony provides a source of income to refinance a mortgage after divorce, or get a college education, or simply close the household budget gap until a spouse can earn more through working. Alimony helps divorce cases to settle by motivating spouses to pay alimony to those who need it.
Most divorce cases, perhaps nine out of 10, are settled out of court. Still, the settlement process may take time for investigation and negotiations. If you are newly separated, or have been separated for some time, ask your divorce lawyer to move forward deliberately. Make a good deal, and get it signed before the end of the year. After New Year’s Eve 2018, one of the most important tools for settling a divorce case will be gone. If you are interested in discussing your individual situation with our divorce attorneys, call Pollock Begg Komar Glasser & Vertz LLC.
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