Coloradans who are considering divorce must think about more than the basic issues that led to the decision to part ways with a spouse. The sudden concern about timing stems from changes to the tax code that could have an impact on the financial situations of those who are divorcing and will pay or receive alimony. Understanding these aspects is imperative to a divorce case and the determination of whether to file immediately.
For 75 years, those paying alimony have been allowed to deduct it from their taxes. Those who were receiving alimony had to claim the payments as income. Both requirements have changed. For people on both sides, it is important to assess the ramifications of waiting until 2019 to divorce. Spouses who are going to pay alimony might be better off if the divorce is finalized before year's end.
The Internal Revenue Service says that in 2015, there were nearly 600,000 people who claimed the alimony deduction. More than 414,000 reported that they received alimony. Around 827,000 people were divorced in 2016 and, for people who are planning to divorce, understanding this tax change is key.
Alimony is often a source of disagreement during a divorce and this change to the tax law complicates it to a greater degree. When a divorce is being planned, some couples can seamlessly settle their issues and move on with a relatively amicable relationship. Others are more contentious. The timing of the divorce takes on greater importance with this issue. Having legal advice when getting a divorce in this or any circumstance is a vital part of the process.