Now that 2019 is here, new laws regarding alimony are taking effect. If you or someone you know has already been through a divorce in the past, you cannot rely on that experience to help you through one now. The alimony tax rules are different for the first time in over seven decades. Alimony payments are no longer deductible for the payer or taxable for the recipient.
It is important to consider these new laws as you divorce in 2019. Here are some pieces of advice you should keep in mind regarding spousal support.
Consider property division instead
If one spouse requires alimony payments, you may want to think about another form of payment. Instead of setting up an alimony arrangement, you may be able to come up with payments via property division. For instance, if one spouse needs $500,000 worth of maintenance, he or she could receive $500,000 worth of property instead. Or, one spouse can pay the amount in multiple installments over time.
Keep other tax changes in mind
The tax laws that are going into effect do not only concern alimony. These laws may also impact home ownership and claiming your children on your taxes. For example, the child tax credit is now $2,000 for each child instead of $1,000. But the credit ends for couples who make over $400,000. Additionally, mortgage interest deductions now have a limit of $750,000 instead of $1 million. Consider the tax implications of your entire divorce.
Opt for a one-time payment
If you want to keep things as simple and civil as possible, you may want to decide to make one substantial payment instead of smaller ones over a longer period of time. This helps reduce conflict and drama from occurring later on, which can help you save money overall.
Taxes are always difficult to sort through when it comes to a divorce. Make sure you rely on the advice of your divorce attorney regarding your specific situation.
