For people in Arizona who were already thinking about divorce, changes in the tax laws may be pushing many people into action. Changes to the U.S. tax code were signed into effect in December 2017, and this includes some clauses that could make spousal support more expensive for the paying spouse. Approximately 800,000 couples across the United States finalize their divorces each year; however, in 2018, that number may show an uptick as divorcing spouses act fast in order to pre-empt the changes.
Divorce lawyers across the United States have noted that they have seen an increase in inquiries and initial consultations following the announcement of the changes with the adoption of the tax bill in 2017. The concerns have been particularly prevalent from people in higher tax brackets and significant assets who may expect to carry a substantial bill for alimony. Before the changes go into effect, the divorcing spouse who pays spousal support can deduct some of those costs each year from their taxes.
On the other hand, spousal support income is currently taxable for the recipient alongside other income. In 2019, this will change dramatically. While the payment of alimony will no longer be tax-deductible for the payer, the recipient will now no longer need to pay taxes on that income. In other words, the taxation burden related to alimony will shift toward the paying spouse for all divorces finalized in 2019 and later. The change will not affect couples who finalize their divorces before 2019.
When people decide to end their marriage, it can be important to have a divorce lawyer explain the many complicated issues involved in the process. A family law attorney may provide representation and advocate for their client’s interests on financial matters like spousal support, asset division and taxation as well as other key issues such as child custody.