Divorces can be hard on everyone. A couple should thoroughly consider the ramifications, emotionally and financially, before proceeding. As they try to determine their ‘new normal’ with respect to their family and possessions through divorce agreements, there are changes to the divorce laws which go into effect in 2019 that should be considered.
Here are 5 things you should know:
Alimony (maintenance) will not be deductible or taxable. Those parties who pay alimony have been able to deduct their payments on their Federal Tax Return, reducing that amount through tax filings. That will no longer be available. Conversely, the person receiving alimony payments has had to report alimony as taxable income, which will not be necessary going forward.
Existing divorces, or those finalized by the end of 2018, will be grandfathered into current laws. If you are already divorced, or will be before the end of 2018, you will be grandfathered into the current laws. However, if the divorce agreement is modified in 2019 or later, the agreement may be subject to the new laws.
Review pre- and postnuptial agreements. Because of these new changes, some items in these agreements may not be valid going forward.
Tax deductions for children are changing. The new tax code eliminates the $4,050 exemption for each dependent. However, the child tax credit will increase from $1,000 to $2,000. In addition, standard deductions will increase for a single taxpayer from a little more than $6,000 to $12,200, and for joint marital returns, $24,400.
Legal fees. The legal fees associated with acquiring alimony will no longer be deductible.
If you are considering divorce proceedings, or want someone to review pre- or postnuptial agreements, the Attorneys at The Greenberg Law Firm will provide counsel so you will know what to expect in the future. Contact us today to learn more at (630) 416-4747.
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