In the last few days of 2017, President Trump signed the tax reform bill into law. Florida residents are still trying to figure out exactly what the changes will do to their finances. If you are getting a divorce, however, you probably have extra concerns about this new policy.
Last November, we wrote about how the tax proposal would impact spousal support. Now that the bill has passed, alimony is no longer deductible for the payer, but the receiver will not have to pay income tax on these payments. The bottom line is that a larger share of spousal support will go to the government through taxes.
Although this tax adjustment will not come into effect until 2019, current divorces may already perceive a difference. For couples divorcing in 2018, this policy could transform alimony debates into aggressive battles.
According to Yahoo Finance, the spouse who would collect alimony will receive a better deal in 2019, which means that they could gain an advantage by prolonging the divorce process until next year. However, the tax bill hurts the spouse who owes alimony by removing the deduction. Therefore, the paying spouse has an incentive to rush the divorce this year.
The actual effect that the tax bill has overall is yet to take place, but the added conflict between spouses may make divorces much more difficult this year. Spouses may end up battling over the timing of their divorce finalization because it could affect spousal support by a margin of thousands of dollars on each side. Divorcees may want to seek tax-savvy attorneys who can fight for the best financial outcome in a time of uncertainty.