January is known as “divorce month,” and as such, it’s a good time to talk about how the new tax rules and other changes could affect your divorce. Couples who plan to divorce in 2019 should be aware that new spousal support tax rules could change the way they want to approach this typical negotiation.
Spousal support is paid to one spouse from the other. The amount and length of time it’s paid varies, but it’s primarily determined based on how long the couple has been married, their ages, the health of each party and how much they both earn.
In previous years, there were benefits to paying spousal support when it came time to do taxes. For example, the laws allowed the payer to deduct the alimony amount from their taxes. They would essentially eliminate the funds as income, forcing the person receiving alimony to pay taxes on it instead.
Now, that’s all changed. The spouse paying alimony will still have to pay taxes on their full incomes, which is likely to mean fewer people willing to pay alimony following divorce. Even if they pay, they may reduce what they’d like to pay to help themselves, since they will have to pay more in taxes. Under the new laws, the recipient won’t pay taxes on their spousal support, which is a huge benefit to the person receiving support.
While the main changes in spousal support were done with the goal of giving the government more money, it can impact your case, too. Make sure you understand what the changes in spousal support mean for your case in 2019.