New Alimony Law Could Complicate Divorce
Many unhappily married couples decide to stay together for financial reasons. After all, it’s cheaper to stay in one household than to split it into two. Now there’s another reason why you might want to forego the divorce process: new alimony laws.
For the past 70 years, alimony laws worked like this: the paying spouse would deduct the alimony they paid on their tax returns, while the receiving spouse would be taxed at a 15 percent rate, as if the alimony was income. That law is no more. Instead, the law has reversed. Now, the paying spouse will lose the deduction, while receiving spouse will no longer have to pay taxes. This law goes into effect for any divorce that is finalized after December 31, 2018.
This will negatively impact the divorce process. In the past, spouses may have been more willing to pay large amounts of alimony to ex-spouses because they could claim them as tax write-offs. Now, with those deductions disappearing and the receiver getting the money tax-free, higher-earning spouses will no longer be given any benefits to paying alimony. This means if a couple decides to divorce, the higher-earning spouse will want to finalize it before the end of the year, while the other spouse will want to delay it so he or she reaps all the benefits.
If a paying spouse decides to fight for lower alimony payments, the battle will likely not be worth it. You may try mediation to compromise with your spouse, but if the matter goes to court, you could end up paying thousands of dollars in lawyer and court fees and not getting anywhere.
This new tax law also affects couples who may be happily married at the moment, but have prenuptial agreements in place. It is very likely those agreements are based on prior tax law. Something that seemed right at the time could come back to bite a spouse should the couple get divorced later on down the line. This means that those with prenups may want to revisit them and adjust any provisions as necessary to ensure that everything still looks right. You don’t want to have any surprises if you ever divorce.
Contact a High Point Divorce Lawyer Today
Divorces are almost always stressful, and the ever-changing laws only make situations worse. If you’re overwhelmed by the divorce process, the attorneys at McAllister, Aldridge & Kreinbrink PLLC can help. We’ll provide you with exceptional customer service during this difficult time. Schedule a consultation today by calling our office at (336) 882-4300.