Are you planning to get a divorce?
If so, the new tax laws that take effect in 2019 could have a big impact on the whole process.
Spousal support, or alimony, is going to become a big sticking point for a lot of couples under the new rules.
When divorcing couples have widely disparate incomes, spousal support is often ordered. It may just be temporary in order to allow the disadvantaged spouse time to start over and regain his or her independence. Sometimes, however, spousal support is more or less permanent -- especially when one member of a long-term marriage has stayed home to care for the couple's children or is disabled.
Under the old Internal Revenue Service (IRS) codes, the spouse paying alimony used to be able to deduct the value of the payments from his or her income -- while the recipient had to count it. That was an important consideration -- one that often made those spousal support payments easier to swallow. In turn, that made it easier for couples to negotiate their agreements.
The Tax Cuts and Jobs Act changes all that. In any agreements made after the start of 2019, support payments will be subject to the new rules. Payers won't be able to deduct it anymore from their taxable income.
That's a painful adjustment that could make negotiating a divorce agreement a lot harder in the future. Spouses who expect to receive support payments aren't likely too willingly give up the sort of money that it would take to make the bite from that tax loss less painful.
If you haven't yet discussed the situation with a divorce attorney, now's the time to start. The financial concerns of a divorce often require a lot of planning -- and some careful negotiations. If you're counting on deducting the alimony payments you'll make to your spouse, you need to move quickly to finish your divorce before the end of the year.