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New tax laws could impact couples' decision to divorce

Regardless of a California resident's political preferences, changes to the law can have a significant impact on their lives. When the recent changes to the tax laws were put in place, there were ancillary factors that many might not have considered. However, the overhaul has changed the way spousal support is assessed for the supporting individual and the individual who is receiving support. This could have an influence on people who are thinking about a divorce and want to make sure they get the deduction, as they will need to file and complete the process before year's end.

For 75 years, there has been a deduction for alimony for the paying spouse. The receiving spouse needed to declare the payments as income. That will change for 2019, adding a sense of urgency for many people who are thinking about a divorce. Various factors will be part of the process, such as the structure of the settlement. People might begin seeking methods to adjust the settlement to account for this change to the tax law.

In general, the former spouses who are receiving alimony are female. The Internal Revenue Service says that there were almost 600,000 people who deducted alimony on their taxes in 2015. That is the latest year for which information can be gleaned. More than 414,400 people reported that they were paid alimony. The difference between the two figures is believed to be due, in part, to non-compliance. The goal is to increase revenue for the federal government. Divorce has been in steady decline for the past 30 years.

There are concerns that once this tax issue is understood by the parties who are considering divorce, they will rush into it and perhaps end a marriage that could have been salvaged. There are also various ways by which divorce settlements are paid out. This law does not have an end date, as some of the changes to the tax code do. It is permanent.

People who are getting a divorce will have many issues on their minds as the process moves forward. There could be children involved in the case, a property dispute and more. The changes to the tax law adds a separate layer to the process, and people who are considering divorce or are getting divorced should have a grasp on what the tax changes mean to them in the divorce.

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John T. Chamberlin, Attorney at Law
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