Understanding the rules governing tax in relation to divorce will help you make the best decision during your divorce process.
Alimony and Spousal Support
When people think about divorce and the next generation, finances and family wealth are often the last two things on their minds. In fact, discussing finances can be a taboo subject.
If you’re planning to divorce, you may want to hasten your proceedings to take advantage of pre-TCJA alimony tax treatment. Here’s why.
The US has treated spousal support as taxable income to the recipient and tax-deductible for the payor for the last 75 years. However, the new Tax Cuts and Jobs Act scraps this deduction for anyone who signs a separation agreement or gets divorced after 2018.
Have you seen cases where the high wage earner’s income suddenly and maybe suspiciously plummets just before divorce, perhaps because they’ve quit their high level job to take on one in which the person earns much less? If so, would spousal or child support be based on what the payer used to earn or what the person earns now?
If the moneyed spouse has been divorced more than once, will payments to previous spouses and/or children reduce the amount of spousal or child support that a third spouse for instance is likely to receive?
True. And again, I know it’s been a constant refrain, but it is a fact specific case. You’d have to look at what the high-net-worth is and what’s the reasonable standard of living? It is one of the factors to consider. The judges will try to strive as best they can to allow the parties […]