Many people in Maryland who find themselves struggling in their marriages often wait some time before rushing into the decision to get divorced. This is with good reason given all that is involved in ending a marriage. Among the many factors that spouses might consider when deciding what to do with their marriage is how their financial situation might change. This could involve everyday expenses as well as those paid less frequently such as taxes.
For multiple decades now, it has been the responsibility of the spouse who receives alimony payments to pay income tax on that money. In addition, the person who made monthly alimony payments was able to deduct the amount paid on their tax return, thereby reducing their overall tax liability. However, starting next calendar year that will all change and it may well have serious implications for people negotiating their divorce settlements.
Without the ability to deduct spousal support payments, some people may be less willing to agree to paying alimony to their former spouses. This may therefore lead to different agreements regarding their property division settlements. At a minimum, it should require people to evaluate things very differently than have thus far.
Before making any final agreements when ending a marriage, residents in Maryland might want to consult with an attorney to learn about the tax implications of getting a divorce in 2018 versus getting a divorce in 2019.
Source: MarketWatch, “Under Trump’s tax plan, you now have a year to avoid a nasty divorce,” February 14, 2018