Thinking About Divorce? May Want to Get it Done This Year
President Donald Trump’s 2017 tax overhaul eliminates the deduction for alimony payments — for divorces finalized starting in 2019.
For many wealthy couples, reaching a deal by Dec. 31 could mean tens of thousands of dollars in tax savings every year. That’s pushing more of them to finally follow Sucherman’s advice and cooperate as the deadline nears.
Divorce often means war for the top 1 percent. The richer you are, the more homes, possessions, investments and businesses there are to fight over.
In a single-income family, the non-earning spouse can be worried about being cheated by the earning spouse. The result is often expensive negotiations that stretch on for years, as each party tries to inflict maximum damage on the other.
How your prenup might be in jeopardy after tax law:
Alimony, also known as spousal support or maintenance, is typically paid by the higher-earning spouse for a period of time after a divorce. For decades, the payers of alimony have been able to deduct the payments on their tax returns.
Receivers of alimony, meanwhile, were required to report the money as taxable income. The tax overhaul reverses that arrangement, denying the tax deduction to alimony payers while making alimony tax-free to those who receive it.
Because the payers of alimony are almost always in a higher tax bracket than their exes, the new rules will mean less after-tax money to go around.
You can read more about this issue at Think Advisor.
If you have questions about how the new alimony laws may affect you, please contact our office to schedule a consultation.