Alimony Payments Could Shrink Under New Tax Bill
Being controversial is nothing new for this administration, and the new tax bill’s change to alimony payments is no different. While so many of the proposed legislation has been under scrutiny, the proposed tax bill seems to be getting a little more attention and a lot more dissection. It has been all over the news, and there are plenty of videos of fights amongst politicians. With the country already being so divided, it’s no wonder the politics of it are getting heated. But, what does it say and what does that mean for you? If your attorney has experience with cases like yours and understands how alimony payments work, they will have an advantage. If they are new to this focus of the law, you could end up with your life in the balance while they fumble to learn the ropes.
Alimony Payments: Now and Then
Currently, anyone who has to make alimony payments is allowed to have tax deductions. The tax break is something that isn’t well known but has been exercised by many. It is considered to be the government’s way of alleviating the fact that you are required to make payments, and the government is involved. This also means that the government can take away that tax break. And this new bill will do that. It sounds like someone might just be losing a break, but in actuality, it means that you are paying another portion to Uncle Sam. The tax break means that you don’t have to pay taxes on your payments. But, after the bill passes you will. This is something that is causing a bit of a stir in a country that is looking at a little more than a fifty percent divorce rate. You can read more about the new tax reform here.
Alimony Payments: How They Are Calculated
There are several factors that go into calculating alimony payments. They are relative to each state because the court will decide how much you pay and for how long. There are a few basic factors across the board, however. These tend to be things like the length of the marriage, the conduct of the spouse during the marriage, ability to work and employment situation, age and health of the spouse, if they were able to work during the marriage or will need training, standard of living during the marriage and their ability to sustain alimony payments. The court takes all of these factors into consideration and then decides what is fair. While you are in the divorce, it may be hard to agree with what they decide. However, they tend to be as fair as possible. Children are also a determining factor. So, for those who have custody, child support, and alimony payments tend to run hand in hand.
Alimony Payments: The Tax Reform
Because alimony payments can be stressful, there is a tax break for them. That is the government’s way of saying that you don’t have to pay taxes on money if you are giving it to your spouse. It is a nice way for Uncle Sam to say that you don’t have to pay out of your pocket twice. The new tax reform would change that. Now, not only will you be making money that you aren’t keeping; you are paying taxes on it. So, instead of making money and just giving it to your former spouse in alimony payments; you are paying it to your ex and paying taxes to the government for it. You are losing more money for alimony payments that you are required to make by a court. And if it sounds like it is a bad idea, wait until your payments are set, and you see what a difference it will make. The taxes on these installments add up and make a very big difference. Your ex already has to pay taxes on alimony payments, as they are considered income. There will be no change in that.
Alimony payments are something that most people want to avoid. There are ways to minimize the amount you have to pay or keep the requirements out of court. You need to have someone fighting for you who has experience with this. They will know how to negotiate these terms for you and keep them as fair a possible. You don’t want to take the chance on someone who doesn’t know what they are doing. It will literally cost you more in the future. In some cases, it can cost you everything you have. While the courts try to stay fair, you are a number and not a person. This means that they look at the numbers and the case to try to stay unbiased. But, not everything about you is in those files. That is where having someone fighting for you makes all the difference. Start your search here.