In December 2017, the U.S. Congress passed a new tax law that made sweeping changes. As a result, a number of couples in Virginia and across the United States may be hastening their divorce plans before some significant modifications go into effect. Each year in the United States, approximately 800,000 couples finalize their divorces. This number could rise in 2018 as couples seek to avoid a provision in the tax law that will affect the way that alimony and spousal support are taxed.
The provision goes into effect for only those divorces finalized in 2019 and beyond. Many family law attorneys have already reported an increased number of inquiries, consultations and calls about filing for divorce and the impact of the tax law. This is especially the case for couples who may have significant assets and are already in a higher tax bracket. Under the system currently in place until December 31, 2018, the former spouse who pays alimony can deduct a portion of those funds from their taxes.
In 2019, this will change; spousal support payments will no longer be tax deductible. Since this will raise the overall cost of those support payments, it could push support awards in a downward direction. Recipients of alimony currently pay taxes on the funds as income. However, after 2019, they will no longer need to pay taxes on the funds they receive.
A family law attorney can provide advice, consultation and representation to a spouse who is considering ending their marriage in 2018. A lawyer can work with their clients to advocate for their needs and achieve a fair settlement on an array of divorce matters, including spousal support, child custody and asset division.