Burke Levy, P.C.

Family law will feel the impact of tax changes

In marriage, it is not uncommon for one spouse to earn significantly more than the other. Sometimes one partner chooses to stay home to raise children, or accept a lower-paying position that allows them to spend more time with family. While this can work out well during marriage, it can negatively impact a person's ability to financially support themselves after divorce. Alimony is an important aspect of Massachusetts family law that helps address this issue, but changes to the tax laws could affect these payments.

The recently enacted changes to the Internal Revenue Code flip how each ex-spouse will pay taxes for alimony. Currently, the person paying spousal support can deduct his or her payments on their taxes. The recipient, however, owes taxes on the amount received. This usually nets an overall savings between the two. However, starting in 2019, this is going to be reversed -- recipients will no longer pay taxes on spousal support, while deductions for those who pay will disappear.

These changes will likely have a profound impact on how spousal support is handled in the future. Opponents of the change are worried that it will decrease how much support people are able to afford. One expert predicted that payments will decrease up to 15 percent after 2019, when the tax changes officially go into effect.

As long as the process is finalized prior to 2019, Massachusetts couples currently divorcing will likely not have to worry about these changes. However, there are still tax considerations to contemplate regarding spousal support, property division and other important family law matters. Understanding how taxes apply to these issues can help couples reach the most appropriate divorce settlement possible.

Source: kmov.com, "Taxes and exes: How tax plan could alter alimony", Dec. 21, 2017

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