Jasne & Florio, L.L.P. - Limited Liability Partnership
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How will the new tax law affect my divorce?

To avoid a tax hit, your divorce needs to be finalized soon, so make sure to consult your attorney as soon as possible to get the process moving. You can always modify a support agreement later, but the tax benefits will remain the same.

The new tax change could be positive or negative, as long as whatever agreement you finalize protects your financial future.

If your divorce finalizes after December 31, alimony payments will be covered under the rules outlined by the TCJA, which is the inverse of the current standard. Alimony payments are taxable income for payers and not for receivers.

Can I avoid this tax change?

This could put payers at a significant disadvantage. With the lost deduction, it could push alimony payers into a higher tax bracket and force them to pay for spousal support with fewer dollars available.

If it is possible to finalize the divorce soon, payers could avoid the tax change. However, doing so may be incredibly difficult. Here are three tips that could help:

1. Decide what you want, let go of the rest

Start prioritizing what the must-haves for your life after divorce are and what are the “would like to have” items. Conversely, what does your spouse need? The more clarity you have on these questions, the faster you can negotiate and come to an agreement. Consider that your spouse may be weighing the benefits of delaying the divorce for a tax incentive, and find ways to give up something you don’t need as badly to speed up the process.

2. Calculate if settling now is the best option

This tax change may on the surface seem like it is the most detrimental aspect of the divorce, but it may not be. A bad deal with decent tax options is not as advantageous as a great deal with less than ideal taxation. How will the settlement affect you in the long term? Is it worth the tax hit? Take the time to evaluate all options and have a clear picture about what to do.

3. Meet with your divorce attorney

To avoid a tax hit, your divorce needs to be finalized soon, so make sure to consult your attorney as soon as possible to get the process moving. You can always modify a support agreement later, but the tax benefits will remain the same.

The new tax change could be positive or negative, as long as whatever agreement you finalize protects your financial future.

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30 Glenn Street Suite 103
White Plains, NY 10603

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Phone: 914-368-7236
Fax: 914-682-8692
Toll Free: 888-881-7321
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