Changes to taxes could add to the stress of divorce | Lane & Lane, LLC
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Changes to taxes could add to the stress of divorce

Financial security is a crucial concern for many individuals who are going through the end of a marriage. This can make certain topics in divorce somewhat intimidating, such as those pertaining to the division of assets and spousal support payments. In a process that may already be fraught with uncertainty, changes to how alimony payments are taxed could leave some individuals in New Jersey wondering if they can even afford to part ways.

Currently, an individual who is paying child support is eligible to file this amount as a deduction on his or her taxes. Alternatively, the receiving party must file support payment as earned income and pay taxes accordingly. However, under the recent tax reform, in divorces that are finalized after the end of the year, alimony payments will no longer be deductible, and it will no longer be necessary to pay taxes on payments received.

While at first glance this might seem like an advantage for the receiving party, it may actually prove detrimental for everyone involved. These changes could bring about higher levels of conflict or even lead some couples to stay in a marriage that is no longer functional to avoid financial disruptions. Since there is some uncertainty as to how these changes will impact those who are already paying or receiving alimony, it could also leave a couple feeling rushed into making a decision regarding the future of their relationship.

Such concerns may only add to the stress of an already emotional process, but in some cases, the additional worry may be unnecessary. Individuals in New Jersey who are going through a divorce may find it beneficial to speak with a family law attorney for guidance on how these changes might affect them. An attorney can address all a client's concerns and provide advice on how to pursue the best outcome possible regarding his or her future during divorce proceedings.

Source: cnbc.com, "Loss of alimony tax break in GOP bill may add to the financial pain of divorce", Annie Nova, Feb. 4, 2018

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