When a couple gets married, there are numerous tax-related consequences that go along with the event, but what many people do not realize is the same thing happens when a couple gets a divorce. If you are in the process of ending your marriage, or if have recently gone through a divorce, you need to know what the tax implications are.
Decisions made about issues such as spousal support, parental responsibility, and the division of marital assets will all have an effect on the finances of divorcing spouses, and it is important to understand how changes to tax laws will impact these decisions. Some of the recent changes which could affect you include:
- Changing Net Incomes – The standard deductions have increased for individual taxpayers, but personal exemption deductions for dependents have been removed. There are also new caps on the amount that is allowed for deductions such as mortgage interest and local and state taxes that were paid. Tax rates and brackets have also been changed. Any of these changes could result in a significant adjustment to your net income, especially if you have a higher income level. State child support guidelines are based on net income, so these changes could also impact the way that child support is calculated.
- Expanded Child Tax Credit – Who will claim the tax deductions for children is usually an issue that must be resolved during divorce proceedings. This deduction is often alternated between the parents. Going forward, the child tax credit is $2,000 for each eligible dependent. People filing single with incomes up to $200,000 and those filing married with an income up to $400,000 will be able to claim this benefit.
- Expanded Use of 529 Plans – Families that have a 529 plan to save for college for their children can expect to have an expanded use of these types of funds to pay for educational expenses.
- Elimination of Alimony Deductions – For couples who have finalized their divorce on or after January 1, 2019, spousal maintenance (alimony) will no longer be an allowable tax deduction for the payor, and the payments will not be taxable for the payee. This will likely become a significant factor during divorce negotiations. Divorcees who signed their paperwork before 2019 will not be impacted by these new laws. These laws will also not impact any post-decree modifications, as long as the original divorce was finalized before 2019.
Contact an Experienced Lisle Divorce Lawyer Today
The dedicated DuPage County family law attorneys at Momkus LLC have extensive experience handling divorce and related family issues. With the new laws having just been implemented, it is important to understand how they may impact your current situation or any decisions you make for the future. Contact us today at 630-434-0400 to schedule a consultation.