Did you know that getting a divorce in 2019 could be incredibly expensive?
Divorce is already an expensive venture because of all the assets you have to share with your former spouse, alimony payments, child support and other fees, but now it could be even worse because of the changes in the tax law that were made in 2017.
Why will a divorce become be more expensive next year? For starters, the 2017 tax changes eliminate the ability of former spouses to deduct their alimony payments on yearly returns. Spousal support payments are separate from child support payments. They are paid to a former spouse for a specified period.
This repeal in the deduction allowance for alimony payments is for any divorce that is finalized after December 31, 2018. If you already pay alimony, you don’t have to worry about this new tax rule as you would be grandfathered into the old law and still be able to claim the payments as a deduction on your return.
The change in the tax law could also affect how prenuptial and postnuptial agreements are written. Those kinds of agreements typically include information as to how alimony payments will be handled in the event of a divorce. With the new tax law in place, the language used might need to be changed.
According to the Internal Revenue Service (IRS), there were roughly 600,000 returns that claimed deductions for alimony in 2015. People who already have their divorce agreements in place will be able to continue using the old tax rules — while everyone else will fall under the new rules.
If you’re thinking of a divorce, make sure that you consider the effect a delay could have on your financial situation in the future.