The months following the holidays are generally busy for divorce attorneys as many couples spend time together and realize that they just don't mesh anymore. This year, though, there's a final rush right before the year ends for a whole other reason. Many couples are looking to finalize their divorces before Jan. 1 in hopes that they won't be impacted by the changes to alimony that the new Tax Cuts and Jobs Act will bring with it.
Come Jan. 1, the Tax Cuts and Jobs Act will go into effect. Once it does, an alimony-paying spouse will no longer be able to take a tax deduction for making such a payment on their yearly tax filing.
Time is ticking down before the Tax Cuts and Jobs Act (TCJA) goes into full effect on Jan. 1, 2019. Once it does, it will change how both alimony and child support are dealt with.
The idea of one spouse paying another a certain amount of money to support them so that they could continue to live the same lifestyle post-divorce that they did while married is a concept that originated in England. Although the idea of alimony or spousal support was brought over by settlers centuries ago, it's still something that's alive and well here in the United States today.
A new tax code, that's known as the Tax Cuts and Jobs Act, is slated to go into effect on Dec. 31, 2018, that will greatly impact divorcing spouses' finances.
Alimony once was a wife and stay-at-home mother reaching an agreement with her ex-husband regarding both spousal and child support. He agrees to pay a set amount every month and pays for a few months, but then suddenly stops. If this describes the predicament you find yourself in, then you may wonder what avenues you can pursue to recover what you're owed in your case.
Contrary to what many paying spouses may think, alimony is not intended to penalize the paying spouse for deciding to move forward in divorcing their husband or wife. It's instead intended to help equalize the playing field between one spouse and another, especially when there's a disparity in income between the two.
During the past 75 years, each state has been responsible for setting their own rules for how decisions regarding alimony awards would be made. This has made it difficult for legal experts to give a single answer about how its tabulated.
In some jurisdictions, child support awards are determined using a formula whereby one parent's income, the amount of children he or she has and other factors may affect how much the other one is ordered to pay. While modifications can be made in some cases outside of the formula based on extenuating circumstances, in most cases, rates remain relatively the same.
Just before their holiday break, Congress passed and President Trump signed the much-talked-about and highly-debated tax reform bill. Among the changes in the sweeping bill is that alimony will no longer be a factor when divorced people file their income taxes, whether they are paying it or receiving it. It will be a non-issue to the Internal Revenue Service, just like child support is.