Here’s a quick refresher course on a big imminent change to family law in New Jersey and nationally, set to take effect from the advent of the upcoming New Year.
That change is in the divorce realm, pursuant to a major adjustment crafted in the federal Tax Cuts and Jobs Act. That enactment basically turns alimony law upside down by eliminating the tax deduction it has long enabled payers to take. That benefit will no longer be available for paying ex-spouses in divorces concluded after the final day of this month. In tandem with that, receiving spouses will no longer have to pay taxes on spousal support payments in divorces concluded in 2019 and thereafter.
Time is obviously running short on the long-tenured status quo, which means that many soon-to-be exes might reasonably have legitimate questions and concerns regarding alimony payments and receipt. It can be critically important for some couples to know that the impending inability to claim alimony payments as a tax deduction could push select payers into a higher tax bracket, adversely impacting available support dollars. A number of other concerns might also arise.
A recent Forbes article on the subject matter duly notes that divorcing parties “must have a written agreement before New Year’s Day 2019 to retain deductibility.” Parties acting timely can also “modify an agreement in future years and still keep current tax benefits.”
The Forbes piece rightly stresses that, although some parties might want to settle their divorces as quickly as possible within this month for tax purposes, doing so is “not worth signing a bad deal.”
With the clock rapidly ticking toward 2019, divorcing couples with alimony as a bullet point on their dissolution checklist might reasonably want to confer with a proven family law attorney well versed in matters relevant to spousal maintenance and asset distribution.