When Coloradans are at the end of a marriage and planning a divorce, there are a litany of issues they will consider during the process. Divorce is an emotional rollercoaster and sometimes the future can be obscured by the present woes. It remains important, however, to think about how the divorce will impact them financially in myriad ways. That can include tax implications they might otherwise not have considered. One factor that has been discussed in detail recently is the new tax laws created by the Trump Administration and enacted by congress.
On January 1, the tax laws regarding alimony and that it will no longer be tax-deductible should be understood by divorcing couples. The previous rules were in place for more than seven decades. Currently, the payments can be deducted by the former spouse who pays alimony. The receiving spouse declares it as income. As soon as the new year dawns, that will end. For those who are trying to complete their divorce before the year is over to take advantage of the law as it stands, it can be complex with time constraints. The settlement must be in place before the year is over. If there is a temporary agreement, that is not enough.
Although this can be viewed as problematic, it is not as bad as many might think. Since there are other benefits in the new tax laws, the change to alimony rules could be mitigated for many people. There are options for people who want to try them. For example, rather than using alimony as it has been done in the past, there could be payments for property division instead. That remains a non-taxable payment. One thing that is key is that the spouses - if possible - stay on good terms and discuss the case amicably. There are always negotiable points that could benefit both sides, expedite the case and address everyone's goals without the situation spiraling out of control.
Having legal assistance is always a wise step for couples getting a divorce now or after the new year. A law firm that specializes in family law will grasp the new tax laws, alimony, division of assets and any other issue that comes up. Even for those who will not meet the deadline to avoid the tax changes, there are options. A law firm with experience in divorce cases can help.