Divorce attorneys all over the country are commenting about republican’s new tax plan and the impact it will have on divorce processes. The new tax code eliminates tax deductions on spousal support for divorce starting on Jan. 1, 2019. This could mean a rise on divorces for this current year.
Since 1942 spousal support has been deductible, and since then it has been used as a leverage in divorce negotiations to help settle the case. For higher-earning spouses there is an incentive to pay higher alimonies since they are deductible from their income tax.
However, from the House Republicans point of view, these long-time tax breaks seemed unfair for married couples who don’t have this option available to reduce their income tax like divorce couples do.
On a different approach this new tax code could affect the chances of dependent spouses to reach financial stability after divorce. It would impact primarily women who are the most likely ones to be the payee spouse and tend to earn less.
The payor spouses won’t have the benefit of reducing their tax obligations through alimony payments, hence during the divorce process they could argue to pay a lesser amount.
This tax code will come at a bad timing for many, particularly those with the higher income and seniors who have earned more wealth over the years and that currently own various properties. According to a study from Bowling Green State University, the divorce rate for baby boomers doubled between 1990 and 2010.
There is no time to wait, If you’re considering a divorce act now. The sooner you present your case, the better chances you’ll have to argue for a good settlement, whether you have the higher income of your household or not.
Avoid what could turn into nasty divorce negotiations on 2019 and schedule a free consultation today, we have family law specialists ready to assist you.