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New tax laws may make divorce even more expensive

As if the cost of living in Arizona these days isn't high enough, new tax laws may make it more expensive for couples who are deciding to split. The least of concerns for those going through a divorce are taxes, but new tax laws that go into effect in 2019 may impact those who are ending their marriage. The changes stem from the Tax Cuts and Jobs Act, which was signed into law in Dec. 2017.

Under the current law, the spouse paying alimony is allowed to deduct those payments, while the spouse who receives alimony is taxed according to his or her tax bracket. However, the new law makes alimony nontaxable for the recipient and not tax-deductible for the payer. This legislation reverses tax laws from 77 years ago that were designed to ease the transition from paying taxes jointly to separately.

The tax deduction for payers of alimony under the current law often acts as an incentive by allowing the higher earning spouse to pay more in alimony to the lower earning spouse. Since the lower-earning spouse would be paying less taxes at a lower rate, this would mean more money for the unit as a whole. However, with the elimination of the tax break, the amount of money paid in alimony may be reduced, which means the receiving spouse gets less monetary support in the long run. Those opposed to the new law say that it is possible that the new tax structure could discourage the payment of alimony, thus making divorces even more complicated.

The end of a marriage can be an emotional, difficult and expensive process. Those in Arizona considering divorce should educate themselves on new laws that may affect the process and seek professional assistance for any legal questions. A knowledgeable and experienced attorney can provide guidance and position individuals for the best possible outcome.

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