Something old,
Something new,
Something borrowed,
Something blue.
There can’t be many in Ohio, or perhaps the whole Western world, unfamiliar with that rhyme. It has come down through generations as a list of things a bride should wear on her wedding day to bring good luck. With the recent tax overhaul passed in Washington, some suggest there may be an application of the poem to divorce too – at least, perhaps, the first two lines.
Those who have experience in divorce and family law know that possible financial disparity between the two parties involved is common. And as we noted in a post earlier this year, keeping track of the monetary elements of a divorce can become a challenge that requires a great deal of organization. While taxes weren’t mentioned at that time, it’s something that we feel deserves some attention now.
Something old
Of particular note is the provision in the new tax law that switches the tax burden of spousal support on the parties of a divorce. Under law dating back to the 1940s, the payer of support is eligible for a deduction on what is paid. The money is counted as revenue to the receiver and that person pays income tax. That changes starting on Jan. 1, 2019.
Something new
As part of any divorce executed after Dec. 31, 2018, the spouse paying alimony won’t be eligible to take the previous deduction. The money won’t be counted as taxable income to the recipient. Divorce decrees finalized before the end of this year will continue to be controlled by the old law.
What effect the change in law will have on the divorce process can’t be predicted for sure, but speculation abounds. Some observers expect a surge in efforts to close out divorces now underway so that they are finalized by the end of the year. And respondents to a recent survey of matrimonial attorneys reveals practitioners expect divorces after the change will be more hostile.
Emotion tends to be part of nearly every divorce. Taxes are one more element that can fuel the fire. For confidence that the balls in the air are effectively handled, consulting an attorney is strongly encouraged.
