The new tax laws regarding alimony are generating increased interest from people in troubled marriages, including those in Washington, D.C. Since these laws will only affect divorces filed after 2018, lawyers have reported an increasing number of inquiries from people who are thinking of separating.
Currently, most people who pay alimony are able to deduct their payments. This can result in significant tax savings for those paying alimony. Those receiving alimony have to report the money as income on their taxes. With the new laws that will take effect in 2019, however, alimony will no longer be tax-deductible for the person paying. Spousal support will essentially become tax-free income for the receiver.
As one may imagine, the changes could have deep implications for the divorce process. For example, experts are concerned that alimony payments might become significantly lower for those receiving support. This is because payers will take into account how they will be impacted when it comes time to pay taxes. Additionally, another concern is with the divorce process itself. While some couples might want to push their divorces through during 2018 to avoid the new tax regulations, experts fear that some people who might receive alimony will attempt to delay the settlement negotiation process so that the divorce will not be finalized until 2019.
Washington residents who are considering divorce might find it helpful to speak to a lawyer with family law experience before beginning the process. The lawyer could provide advice to the client and handle the settlement negotiations.