MIAMI, Florida. If you get divorced in 2019 and expect to receive or pay alimony, watch out. In 2019, a 75-year old tax deduction for alimony payments will be eliminated. Individuals who get divorced before 2019 will keep the deduction. This is causing many divorce lawyers to counsel clients to get divorced sooner rather than later if they want to see tax savings going forward.
How can getting divorced now save you money on taxes in the future? Individuals who get divorced before 2019 will be “grandfathered” in to the old code, meaning that they can keep their alimony tax deductions. Those who get divorced in 2019 and later won’t be able to take the deduction. The tax deduction can save payers significant amounts of money. This isn’t a small deal. If you are thinking you might be getting divorced and think that alimony may enter the picture, consider reaching out to Sandy B. Becher, P.A. today, a divorce lawyer in Miami, Florida who is closely watching how tax reform might impact divorce going forward.
According to Politico, the chair of the American Bar Association on family law is telling divorcing individuals to act quickly. A divorce started today can take many months to finalize. If you want to meet the 2019 deadline, you may want to file as soon as possible—not tomorrow, not next month, and certainly not in December right before the law on alimony will go into effect. For individuals who want to get divorced in 2018, the alimony deduction can be an important settlement and bargaining tool that your divorce attorney can use to help you get the best possible outcome. But you’ll need time to be able to work within the current year-long deadline.
The alimony deduction can save families hundreds and even thousands of dollars. High-earners, can save as much as 40 cents for every dollar they spend on alimony payments. Divorce lawyers claim that the tax overhaul will impact women the most. Without the tax relief for alimony, men may be less likely to pay and may fight harder to avoid alimony.
According to U.S. News & World Report, the tax change could potentially make divorce settlements tougher to reach in 2019 and beyond. One of the incentives for paying alimony was that it reduced a person’s taxable income, providing quite a bit in tax savings. Without the tax rebate, alimony payers may want to negotiate to pay less. Women who rely on alimony payments might suffer the most. Women are more likely to stay at home to raise children and put their careers on hold for their spouses, reducing their long-term earning potential.
If you are considering getting divorced, visit us at https://sandybecher.com/ to learn more about how we can use current tax laws to your advantage. You only have until the end of 2018 to take advantages of alimony tax breaks. Contact a divorce lawyer today to learn more about your rights and options.