We have seen it happen here in Michigan at the start of every new year: people decide that they have given their marriages enough second chances. For many, the holiday season served as a final attempt to salvage the relationship, but now that yuletide has passed and the lights and tree have been taken down, it’s time to start not only a new year, but a new phase in life.
There are some changes to the law to discuss with an experienced family law attorney, however. Last year’s Tax Cuts and Jobs Act will have a significant impact on divorce planning this year. In the past, spousal support payments were tax deductible for the spouse making those alimony payments.
Starting this year, those payments are no longer a deductible expense on the payer’s tax returns.
A New York City family law attorney put it simply: “There is no incentive to pay alimony now. It’s really all just money out of the pocket for the payer … (it is) harder to encourage that when you have no benefit to exchange.”
In the past, some alimony payers would split payments between spousal support and child support, paying more in spousal support to take advantage of the tax credit. Those dynamics will likely shift, the divorce lawyer told Fox Business.
Of course, it is impossible to say in a blog post how the change to tax law might affect you and your divorce. To learn more, schedule a consultation with an Ann Arbor family law attorney experienced in complex family law matters such as spousal support, property division, child custody disputes, parenting time disagreements and much more.