As many people have heard by now, The Tax Cuts and Jobs Act (H.R.1) passed Congress in December. The new laws are changing the ways that we address alimony in family law cases. Here’s what you need to know:1. Divorces finalized before 2019 are still operating under the old laws
- Any dissolution that takes place prior to January 1, 2019 will follow the current laws in which alimony orders are deductible to the payor and included as income to the payee.
2. Prior orders will continue to be subjected to the old rules, unless….
- Any modifications for prior alimony orders that were finalized prior to 2019 will still be treated under the “old rules”
- However, there is a special rule, that if you have a preexisting (pre 2019) decree and you have it modified; you can elect to choose to apply the new Act rules in the modification.
3. Other changes to be aware of…
- The elimination of the personal and dependency exemption;
- New reduced tax brackets;
- New dollar amount for itemized deductions;
- Changes to the standard deduction;
- Changes to the child tax credit.
If you’re already in the process of getting divorced, some of these changes may not affect you. However, it is important to be aware and cognizant of the new laws and to meet with qualified professionals who can best explain the implications of any agreements you may enter.
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