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Plan now for upcoming changes in divorce-related tax laws

Washington residents may be interested in learning about upcoming tax changes that will affect alimony payments. Starting on Jan. 1, 2019, new divorcees who have to pay alimony will not be able to deduct support payments from their taxes.

This has led to an increase in individuals seeking to get their divorces finalized before this deadline. The same is true for individuals working as financial planners. However, most people who started their divorce proceedings toward the end of the 2018 calendar year may not get their divorces filed in time to avoid being affected by changes in the tax law.

There are many who see a silver lining with the new tax laws. It simply means that they will need to adjust the way they plan other parts of their finances before they complete the divorce. Things to consider include home ownership and whether or not children can be claimed as dependents.

For example, a divorced individual who is considering keeping the family home will need to make sure that they are going to get the expected tax benefits. If those benefits are no longer available, keeping the house may not be as attractive as it was in years past.

Some may opt to sell the family home since even with the new tax laws, they will be able to exclude up to $250,000 in capital gains as a single individual and $500,000 in capital gains as a married couple. Additionally, tax credits have been increased and now sit at $2,000 for each child who qualifies. This is a $1,000 increase over the previous year.

A family law attorney can help a divorcing spouse draw up documents and negotiate a fair separation agreement. Legal counsel may also provide advice on how to divide shared accounts as well as how to divide joint property.

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