Missouri couples who were considering divorce but did not move forward with it before the end of 2018 should know about how the new tax laws put in place by the Trump Administration will impact them with the dawn of the new year. For those who were completely unaware of how the changes could help or hinder various areas of divorce, it is wise to have a grasp on what is changing and how the person paying spousal support and the person receiving spousal support will need to adapt at tax time. Of course, having legal assistance is always a wise step.
The new law that was enacted in 2018 altered how spousal support is handled with taxes. In the past, the spouse who earned more could make a deduction on the spousal support when filing taxes. The recipient indicated that the support was taxable income. Now that the new year has begun, those who did not complete their case before the end of 2018 face different circumstances. The payments are not deductible for the paying spouse. Some have suggested that spouses who are prospective payers will not have any incentive to pay and will fight any suggestion they do so.
When there are children from the marriage, spousal support and child support are frequently split with more going to spousal support – on paper – so it can be deducted. That benefit is also eliminated and the payer will inevitably want to pay more in child support. The child tax credit is set to replace any exemption a person might have for dependents.
People were repeatedly advised to complete their divorce quickly before 2018 ended so they could still take advantage of the previous tax laws that allowed for the deductions for paying spousal support. Since it is now too late to do that, people getting a divorce should have legal assistance in navigating the new tax laws and understanding how it will affect their own situation. This is true whether it is from the perspective of a paying spouse or a receiving spouse. A law firm that has experience in all aspects of divorce can help with a case.