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Countdown on divorce tax benefits sparks rush to complete process

When a California couple is getting a divorce, there are many issues that will be important as part of the process. Ancillary factors might not be the critical considerations, but they should be factored in as the case moves forward. Previous posts have discussed how the new tax laws will impact certain benefits people get after a divorce such as deducting spousal support. Now, as time begins to grow short on completing a divorce in time to take advantage of the chance to retain that deduction, more couples are expediting their decision to divorce.

This is not just an issue that affects the paying spouse. The receiving spouse should also think about it as judges might begin reducing the spousal support because the absence of the tax deduction will lower how much a supporting spouse can pay. Since there was a benefit for both parties, many couples who were at the end of a marriage sped up the process and filed before June 30. There was a method to this decision because in California, the divorce cannot be finalized until a minimum of six months have elapsed from the start of the case.

With the clock running down, there is an attempt on the part of couples and their legal representation to finalize divorces before the end of the year. Anecdotal evidence and speculation suggests that more people were filing for divorce in the first half of 2018 and, as the year winds down, many people will be waiting to complete their divorce so they can be the beneficiary of the expiring deductions. Because a surprisingly small number - approximately 20 percent of divorce filings in the state - include spousal support, the number of couples who are filing to get the process done in time would be higher were there more people paying and receiving spousal support. The number of people who claim a deduction for spousal support is an estimated 600,000.

It is an unavoidable reality that financial considerations are a part of every divorce. That is true in any case whether the parties are deriving a benefit from the new tax laws or not. When considering a divorce, it is critical to take every single potential issue into account. That includes taxes, how much is paid in spousal support, how much is received in spousal support and more. Having help from a law firm that specializes in family law and divorce can give guidance and advice in these matters and anything else that arises during a divorce.

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John T. Chamberlin, Attorney at Law
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