Ending a marriage can be an expensive undertaking in Georgia. Certain provisions of the Tax Cuts and Jobs Act that go into effect on Jan. 1, 2019 may cause it to be even more expensive. The tax implications of the new laws regarding spousal maintenance can have a negative impact on the financial side of divorce.
Some 77 years ago Congress passed a law that aimed to ease the financial transition on a couple as they went through the divorce process and readjusted to life as single people. The law allowed the person who was paying alimony to deduct the amount from one’s taxable income and the other person paid taxes on the money received. Typically the person receiving alimony had less income than the payor and so was paying taxes at a lower rate. The new law eliminates the deduction for the payor, and the recipient no longer pays taxes on the amount received.
The new law will reduce the amount of money available for alimony as the payor will have to pay taxes on it. Previously, a person who made $100,000 and paid $20,000 in alimony could deduct the alimony thereby reducing his taxable income to $80,000. With the new tax law one has to pay taxes on the $100,000 and so will have less to provide in alimony. Any divorce that is finalized after Jan. 1, 2019 will be subject to the new laws.
A person in Georgia who is considering divorce may want to seek the advice of an experienced family practice attorney. A knowledgeable lawyer may be well versed in the new law and may be able to advise the client on options that are available. An attorney may be able to assist with arriving at an agreement that benefits the parties involved.