The citizens of Arizona should not be surprised to learn that when it comes to the law, keeping up with the latest trends is no mean feat; the consistent introduction of new laws forces lawyers to find novel ways to maneuver within this ever-changing labyrinth. What’s more, failing to appreciate these complexities can be costly for both the lawyers and their clients.
For instance, a new trend that is expected to make an appearance by next year concerns the way divorced couples handle alimony payments. Instead of paying alimony in cash, the alimony payer will find it more advantageous to settle matters through the transfer of tax-favored account balances, which can take place either as a property settlement or as a direct alimony payment.
The reason legal experts believe that this new payment structure is going to become popular can be traced back to The Tax and Jobs Act, which Congress passed in January of 2017. Stated simply, the new act stipulates that alimony payments can no longer be written off the payer’s tax return. In return, the recipient can receive the payment tax-free as opposed to being treated as taxable income. Even though this act seems to favor the recipient over the payer at face value, it harms both parties: Not only does it reduce the overall money to be split by reducing the after-tax income, but it also hinders the recipient from funding IRA contributions.
Because of all of this, it may be wise to hire the services of a professional lawyer who’s well versed in their field. After all, a couple about to get a divorce have to contend with so much more than just alimony payments, yet these payments themselves can be an involved matter requiring plenty of years of experience in order to be structured optimally.
