Many people hastened to file for divorce before Jan. 1, 2019, so that they could take advantage of the existing tax laws.
If you are just now getting around to filing, you will want to become acquainted with the new look of taxes for 2019 and beyond.
Spousal support changes
Prior to Jan. 1, 2019, the party paying alimony or spousal support could deduct those payments while the recipient had to pay taxes. The new law reverses that. While this may seem like a benefit for the recipient, he or she may receive less alimony since the payor can no longer deduct the payments on a tax return.
Taxing the marital home
Women usually want to keep the family home in a divorce settlement. Often this is because there are many memories, they have taken pride in caring for the home and they feel emotionally attached. However, anyone with such an attachment must consider that the new law reduces the amount of mortgage that is eligible for an interest deduction, resulting in home ownership becoming more expensive.
Children and tax deductions
The new tax law eliminates the personal exemption amount for years 2018 to 2025, so you can no longer use a multiplier of children as a deduction. However, as a parent, you may qualify for the more generous child tax credits.
Pre- and postnuptial agreement issues
If you and your spouse have either a prenuptial or postnuptial agreement, let your attorney review it because the new tax law may nullify certain parts. For example, if your prenup contains a pre-2019 alimony payment provision, you may either have to cancel or amend that particular section.
Preparing for the future
Only time will tell how effective the new tax laws will be overall and how they will affect divorcing couples, especially those in the high net worth category. However, if you are preparing for divorce, it would be a good idea to educate yourself on the new laws and learn how they are likely to affect your financial security going forward.