Tax Reform Act Has a Major Impact on Divorce in 2018 and Future
There were major changes to the tax law in 2018 that may affect people getting divorced in 2018 or thereafter. It is important that your divorce attorney is knowledgeable about the new tax law and how it will affect you and your family.
The first major change is that alimony is no longer deductible to the payer or taxable to the payee for all alimony orders entered on or after January 1, 2019. Previously, alimony was tax deductible to the party paying it and taxable to the party getting it. If a court order that was entered before 2019 is amended the new law does not apply unless the Court specifically says so in the modified Order.
The Second major change is regarding children. As of January 1, 2018, the personal child tax exemption is suspended. In a divorce a Parenting Plan designates which parent gets to claim the children on their taxes each year. Although the parent claiming the child will no longer receive a $4,050 exemption per child, there still may be some tax benefits to claiming a child. For example, the child tax credit has been increased and available to taxpayers filing single or head of household.
At the Aldred Law Firm we do not give tax advice. Please consult with a tax professional.