Are you planning to leave the love of your life behind? Do you want to be ‘Happily Unmarried’ once again? Hey, divorce is not that bad! You get an alimony tax deduction…Not anymore!
Alimony is a system where two people make a mistake and one of them keeps paying for it.
There was a silver lining here too- yes, we are talking about Alimony Tax Deduction… which would no longer exist, cometh 2019.
There isn’t a lot of time left now. 2018 would be the best year to get a divorce if you want to grab the federal Alimony tax deduction on payments to your ex-spouse.
The new tax reform from President Trump will abolish Alimony tax deductions for divorcees next year.
Now that tax reform will be in effect, Alimony will no longer be tax-deductable.
What’s in it for Me?
The alimony tax deduction reform isn’t just for people who are planning to divorce; it is for happily married couples and the unforeseen future beyond.
If you’re happily married and it’s all unicorns and rainbows, get back to the ground and give your marriage contract a look. Make sure you update the Alimony clause before the first morning of 2019. That is the only way your Alimony will remain tax-deductable if it comes to that.
Thinking of Divorce? Step on it!
If you’ve been wondering for a long time that you need a divorce, save yourself and your spouse from additional troubles and get your divorce papers set before January 1.
Not only would you save tens of thousands of dollars each month, but your (future) ex-spouse will also be in a better place as all that money will be his/hers. Many spouses haven’t even separated and are rushing to divorce proceedings to strike the metal when it’s hot.
Getting the paperwork done and dusted might be difficult in a short time that remains, but it is very much possible.
Called it Quit? Process it ASAP
Matrimony Lawyers, who are best in business, advise settling divorce proceedings as soon as one can. The Alimony tax deduction can burn a big hole in payer’s pocket after the first of January.
As for the Payer- Stop crying and give them what they want, or you’ll be forced into paying a large alimony tax as it is no longer deductable.
And the person who’s receiving the Alimony- If you’re getting a reasonable amount, agree without any more shenanigans. After all, you were both on the same boat once.
The Gloomy Downsides
Lawyers believe that both sides wouldn’t give up that easy now. The Alimony payer would fight to pay a lower amount due to its taxable nature, and the ex-spouse would naturally ask for more.
This is something that might happen in the coming time. But as of now, more couples are parting ways just to save money and save themselves from additional tax burden.
In every 13 seconds, someone files for Divorce somewhere, and it’s going to get worse. Taxpayers who are planning to receive Alimony would love to postpone the proceedings to 2019, and this is going to result in serious battles.
High earning spouses had a chance to pay more alimony in the past when Alimony tax deduction was a thing. But now, the payer will try his/her best to pay less alimony.
The Best Matrimony Lawyers have their say
The American Academy of Matrimonial Lawyers (AAML) is warning heartbroken couples that this Alimony tax deduction reform will tumble some wallets. In 2019, more money will go into taxes than the receiver’s household expenses.
Here’s what we understood from what AAML said:
- You and your ex-spouse both might be able to grab tax benefits if you speed up the process and finalize the agreement this year.
- Middle class families shall face the wrath of the new law, with potential impact subject to partners’ tax bracket.
- If you think that you and your ex can get away with a temporary agreement, beware! The Alimony agreement has to be a court order or the final settlement.
- Even if you’re happily married, have a look at your alimony provision- The agreement would not be treated with Alimony tax deduction if provisions are not updated.
Lovers’ Spat- Redefined
The payer’s tax was deducted by the same amount as the alimony. But starting next year, it’s going to change. Now, supporting an ex would be tougher than ever.
Prolonged legal disputes and unprecedented quarrels would leave the poor one in a bad condition. Let’s not forget that child support is calculated in accordance with alimony.
There are roughly 900,000 cases of divorce every year, with the alimony tax deduction reform; the number might shockingly shoot up as the receiver would have his/her own way to hit their ex-spouse with tax-troubles.
Whatever might be the case, if you’re wondering what the right time to get a divorce is, it’s now or never. Being divorced on December the 31 also means that your tax returns can be filed as a single person.
Do you know why divorces are so expensive? They’re worth it. Divorce now or do it next year, no amount of money is worth your sanity.