– A D V E R T I S E M E N T –
No couple enters a marriage with plans to divorce, but it continues to be a reality that millions face each year. While there’s plenty to consider throughout the divorce process, both parties should be aware of what’s at stake, particularly whether there is enough income to support two households with the same lifestyle enjoyed as a married couple.
This leads to the issue of alimony, which is essentially a balance of the needs and incomes of the parties that will prevent either from becoming impoverished, but there’s more you need to know. Tax changes to alimony payments in 2019 may cost divorcing couples considerably more – enough to consider a pause in the decision to split and weigh if divorce is really the only option in the end.
How much money will be tied up in your divorce?
How much money can each side expect to give and receive? Unlike child support where there is a mathematical formula to determine the support amount, there is no formula to calculate alimony. It depends on the lifestyle the couple had during the marriage and the ability of the income-earning spouse to pay. For example, if the spouses earned a large income, but spent all of it each year, it would likely be impossible for them both to enjoy the same lifestyle in two separate households. However, if a couple lived below their means during the marriage, it’s reasonable to expect the lower-earning spouse will receive enough in alimony to maintain his or her lifestyle as there is likely enough income to maintain the lifestyle for two households.
In a short-term marriage, there might only be a few years of support to help the lower-income earning spouse get back on their feet, while in long-term marriages, it could be until the recipient of the support dies.
How Changing Tax Laws Could Cost You Thousands
Beginning in 2019, alimony payments will be subject to new tax laws. Previously, the payor could deduct the support from their taxes and payments were included in the recipient’s taxable income. Under new law, the payor cannot deduct the support, and the recipient will not need to pay tax on the support.
While recipients might like the idea of receiving support on an after-tax basis, it will ultimately eliminate the current tax incentive for larger payments, resulting in higher taxes and lower alimony payments. The previous law has historically been vital in assuring both sides maintain their existing lifestyle. Now, couples are facing more financial constraints tied to their divorce than ever before.
It’s important to not only understand the details and changes in the divorce process, but to also have the best legal representation to assure your most favorable outcome.
That’s where Jeffrey Lance Abood and his team at Abood Law Firm can help.