At first, all marriages are joyous occasions and cause for celebration. However, it is a statistical fact that half of all marriages in the United States will end in divorce. Ending a marriage is undoubtedly difficult and can have significant financial ramifications. Those in Arizona who have recently divorced or are planning to divorce should be aware of recent tax law changes.
The new laws relate to alimony or separation payments under a divorce agreement, such as written separation agreements, divorce decrees and separate maintenance decrees. Under previous tax laws, alimony payments could be deducted from the payor's taxes, and receiving spouses were required to include alimony payments as a part of their income. However, as of Jan. 1, 2019, new federal tax laws state that alimony payments cannot be used as a tax deduction by the payor spouse.
Also, under the new laws, the receiving spouse is not required to include alimony as a part of his or her income. The new tax laws only apply to divorce or separation agreements that were executed after Dec. 31, 2018. Agreements executed on or before this date would follow the previous tax laws.
For those in Arizona who are separating or ending a marriage, taxes may be the least of their concerns. However, individuals who are considering or going through divorce should familiarize themselves with these new laws. The end of a marriage can definitely be confusing, so seeking professional assistance could be very beneficial. An experienced attorney can answer tough questions and provide much-needed guidance during this difficult situation.