HOLLYWOOD, Florida. Planning to get divorced? Just thinking about it? If you get divorced before December 31 of this year, you could enjoy certain tax benefits. According to the New York Times, the alimony tax deduction expires this year thanks to the Trump tax cuts. This could impact alimony agreements significantly.
According to CNBC, the alimony tax deduction changes mean that the person paying alimony can no longer deduct them for tax purposes. For wealthier couples, the alimony tax deduction would sometimes help lead to a better alimony agreement due to the tax breaks the deduction once provided. The deduction could even change a person’s tax bracket. For example, a man making $100,000 a year, who paid $25,000 in alimony would only have to claim he made $75,000 that year on his taxes. This could mean significant savings when it came time to write the IRS check.
Yet, starting January 1st next year, alimony won’t be deductible and that motivation to pay will be gone. Many experts worry that this can impact women’s access to alimony. The former tax benefits allowed the higher earner to transfer the tax burden to the lower earner, but now that benefit is gone. Many divorce lawyers think that this will make divorce messier in the coming year.
Fortunately, for couples who finalize their divorce agreements before December 31st of this year, they will be grandfathered in to the prior tax arrangement, a benefit that can save them thousands every year.
You can avoid the consequences of the alimony tax changes, but only if you get divorced before December 31. This has left many couples scrambling to file paperwork or to sort out whether they will stay together or part ways.
The tax changes can also impact prenuptial agreements made before the tax changes. Couples who are married who have prenuptial agreements should consider revising them. Many prenuptial agreements are drafted with tax benefits of alimony in mind. Without the tax benefits, individuals need to think about how alimony will impact their finances. This can create headaches for couples who don’t want to bring up the subject—especially if their marriage is going well. And for couples who might be facing strain, bringing up the subject could result in divorce.
Yet, there might be benefits to the tax law that can increase the net worth of the very wealthy that could offset the alimony changes. For example, pass-through businesses could get a boost in valuation due to the Trump tax cuts, meaning spouses receiving child support could potentially get more money if their ex’s business is valued higher. So, if you and your ex own a business together, considering its structure might be important when figuring out how to divide assets and structure your divorce settlement.
With divorce, there is always much to consider. This year, given the potential tax changes, divorcing couples might have one more motivation to divorce sooner—or to wait.
If you are thinking about getting divorced, preparation is key. The Law Offices of Jodie Bassichis, P.A. are divorce lawyers in Hollywood, Florida. Visit our firm at http://floridadivorcesource.com/ to learn more about how we can help.

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