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Tax changes affect family law issues

On Behalf of | Dec 9, 2018 | Firm News

Within a few weeks, the new year arrives and changes take place. These are not only changes brought about by New Year’s resolutions, but new laws that may affect the family law decisions many people make in 2019. In fact, those in Louisiana who are considering divorce in the near future may be interested in the coming changes in the federal tax laws regarding alimony.

For the time being, the ex-spouse who paid alimony receives a tax deduction on the amount paid. This frequently encouraged the higher-earning spouse to agree to pay more spousal support. The receiver of the alimony was required to include all payments as taxable income, but that spouse was often in a lower tax bracket. The coming changes may have far-reaching effects for those considering divorce.

Starting in January, the spouse who pays alimony will no longer receive the tax deduction, and the spouse receiving support will not pay taxes on the alimony. Critics of the new law fear it will complicate divorces and make matters difficult for those spouses, typically women, who will see a dramatic cut in their income following the divorce. Higher-earning partners will be more likely to make the divorce contentious as they fight to avoid spousal support orders, and the resulting payments may be smaller than the receiving spouse needs to become financially stable after the divorce.

Those in Louisiana who already have alimony orders in place should be cautious about modifying them after the new year since the tax laws may apply to their new terms. Additionally, couples with established pre or post-nuptial agreements would be wise to review their contracts in case they contain items related to spousal support that contradict the new law. A skilled family law attorney can assist those who are affected by the changes in tax laws in the coming year.