THE BIGGEST DIVORCE CHANGE IN 2019
As we move into 2019, it is important to understand how divorce laws are going to change moving forward. One of the biggest changes involves alimony and taxes. The impact on your financial situation could be dramatic.
In the past, alimony counted as taxable income for those who received it. If you got $50,000 per year in alimony payments, you had to report it and pay taxes just like you would if you had a job that paid you $50,000 annually. That alimony was your income — or at least part of it.
On the other side of the coin, if you paid alimony, you could write it off on your taxes. It was deductible. The government wasn’t going to tax that money twice, so you did not have to pay taxes on it. While this did not make up for the money you paid, it helped to lessen the blow.
That’s changing. If you divorce this year or in the future, if you pay alimony, it’s not a deduction anymore. Meanwhile, your ex does not report the alimony as income and does not have to pay taxes on it.
It is worth noting that the changes only apply to divorces finalized after 2018. If your divorce is already in place, the rules stay the same as they have been. There are some exceptions, however, for divorce agreements that get modified in 2019 and beyond.
Whenever there is a significant change to tax laws or divorce laws, you must be aware of how these change can impact your situation and what steps you need to take to seek the best agreement you can.