Rhode Island spouses considering divorce may be particularly troubled by the potential financial implications of ending a marriage. From real estate division to spousal support, financial issues can be contentious aspects of a divorce. With the signing into law of tax reform bill in December 2017, there are major changes to spousal support scheduled to go into effect in 2019 that could have significant implications for divorces in the future.
U.S. federal tax law has taken a uniform approach to spousal support for the past 75 years. The paying former spouse has been consistently eligible for a tax deduction for the amount of payments made. On the other hand, the alimony recipient reported the payments and paid taxes on them as part of their overall income tax bill. However, as of January 1, 2019, all of this will be reversed for newly finalized divorces. The ex paying support will no longer be eligible for a tax deduction, and the recipient will no longer have to pay income taxes on the payments received.
These changes to the tax code are expected to cause significant reverberations for divorces finalized in 2019 or later. Overall support payment amounts are expected to decrease since they will no longer render a tax benefit. In effect, the amount of alimony that a former spouse can afford to pay will be somewhat or significantly reduced.
Because these changes are so major, many spouses thinking of ending their marriages are visiting divorce lawyers to learn more about the repercussions. Many others are working hard to finalize settlements in 2018 and avoid the changes altogether. For people looking to deal with spousal support and related issues, including asset division and child custody, a family law attorney can provide advice and representation to protect one's assets and achieve a fair settlement.