Many Maryland couples and others all around the nation will soon be ringing in the new year on Jan. 1, 2019. While a time for celebration, it will also be a time for change for those divorcing couples who have yet to make alimony or spousal support arrangements. A new law will go into effect that day that has major implications on the taxation of alimony payments prospectively.
A law that is over 70 years old has required those who receive alimony to pay taxes on it. Also, the person paying alimony was allowed to deduct the amount from his or her taxable income. The new law will reverse this, taking away both the tax deduction for the payer and the tax burden for the recipient.
The knowledge that this change was to occur has spurred a rush to get divorces finalized before the end of 2018, as any completed by that date would be grandfathered under the existing tax law. Many matrimonial attorneys have reported that the last several months have been a particularly busy period. For those who were unable to finalize their divorce this year, experts have offered some advice.
The alimony change was part of the comprehensive Tax Cuts and Jobs Act. Analysts recommend looking at how other components of the bill may ease tax burdens while going through a divorce. Particularly, it would be wise to investigate how claiming children on a return or home ownership could affect one’s taxes.
When going through a divorce, it is important to remember how decisions made now, such as those concerning alimony, will impact a person’s life indefinitely. A Maryland divorce attorney will ensure that someone’s interests are protected when these issues arise. A respected lawyer will seek the best possible results in a client’s divorce settlement.