What The New Tax Cuts and Jobs Act Means For Your Divorce! (Pt 2)

Starting in 2019, divorce agreements may be structured differently to account for the way alimony will be taxed

 

Welcome back, and thanks for joining us again. We’ve been discussing the new Tax Cuts and Jobs Act, and how it will affect divorces in the future. As we explained last time, the new law will change the way that alimony is taxed, which many people are actually unhappy about. However, there are still many questions that have people wondering about the new tax law. We’d like to answer a few of them for you…

 

Will the changes apply if you got divorced before 2019?…

 

We get this one a lot! People are worried that their current alimony agreements will be changed when the new law takes effect. Rest assured – that’s definitely not going to happen. This change only affects alimony agreements made after the new law goes into effect.

 

Any alimony or separate maintenance agreements signed by the court before the new law takes effect, won’t be affected by it in any way. The current laws will continue to apply to any and all divorces that are finalized before 2019 begins.

 

What about if you modify your alimony agreement after 2019?

 

Another concern that some people have, is whether or not the new law will affect their alimony agreements if they make changes to them in the future. The answer is no, the new law won’t affect alimony from pre-2019 divorces, even if the modifications are made after 2019!

 

That is, unless you want it to! The only way the new law could affect an old alimony agreement, is if the modified agreement expressly specifies that the new TCJA rules apply. Otherwise, it will continue to be governed by the old income tax laws.

 

Could this affect divorce rates before 2019?

 

It’s an interesting question, and one that several people have brought up already. Because the change won’t affect people who get divorced (or sign a separation agreement) before 2019, spouses who think they’ll end up having to pay alimony may want to take advantage of the deduction before it’s no longer an option. Based on this assumption, several family law specialists say there might be a slight increase in divorces this year.

 

It’s actually become a bone of contention for some. The new law is controversial, and people are speaking out on both sides of the fence! Congress’s nonpartisan Joint Committee on Taxation is hugely in favor, saying that the changes will increase tax revenue by billions every year. However, the National Organization for Women, and the American Academy of Matrimonial Lawyers have both opposed the alimony change, claiming it will be a financial disaster for women!

 

Do you have questions about your alimony agreement in Michigan?

 

If you or a loved one are considering divorce and are concerned about how the new law will affect your alimony agreement, call The Kronzek Firm at 866 766 5245. Divorce is always a difficult process, and alimony orders can add to the complications. Our highly skilled family lawyers have been involved in hundreds of divorce cases over the decades, and can help you come to a fair arrangement.

 

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