Tax Reform, Divorce, and Alimony in 2019
In 2019, drastic changes to the way alimony payments are taxed are coming as a result of the release of the “Tax Cuts and Jobs Act“. These changes will have dramatic effects on divorces in Passaic County, Paterson, Wane, Woodland Park and the entire state of New Jersey. It is critical to note that these changes will only affect alimony agreements signed after December 31st, 2018. This means existing alimony agreements and taxation will remain the same. These are significant changes, and may cause you to desire either to finalize your divorce in 2018, or postpone it until 2019 depending on whether you are making or receiving alimony payments.
Alimony and New Tax Law in Passaic County – Alimony Payers
Current taxation laws allow individuals who are paying alimony to a former spouse to deduct those alimony payments from their income before paying income tax.
For example, if one earns an annual income of $150,000, and makes annual alimony payments to a former spouse totaling $30,000, your declared taxable income would be $120,000 (your total income minus alimony payments).
According to the new laws, applicable to alimony agreements signed after 2018, payers of alimony can no longer deduct alimony payments from their income; which means in the above example that person would instead be required to pay income tax on the full $150,000 annual salary without being able to deduct alimony payments. This is a substantial change.
Clearly, this new law represents a drastic change for all alimony payers and as a result represents a compelling reason to speak with your Passaic County divorce attorney, and get a speedy resolution to your divorce so that it will fall under existing alimony tax laws.
Alimony and New Tax Law in Passaic County – Alimony Recipients
If you are recipient of alimony payments as part of your divorce settlement agreement, your situation will dramatically improve with the new 2019 tax laws.
At this time, individuals who receive alimony payments are obligated to declare those payments as part of their annual income. However, under the 2019 Tax Cuts and Jobs Act alimony recipients will no longer be required to pay income tax on the alimony that they receive.
Thus, if you expect to receive alimony and spousal support as a part of your divorce settlement, you should speak with your Paterson divorce and alimony lawyer about delaying the resolution of your divorce until 2019 in order to take advantage of these significant changes that can be important to your future finances.
Woodland Park Alimony Agreement Lawyers
It is very important to stress that these changes to the way alimony is taxed will only apply to divorce agreements which are signed after December 31st, 2018. Only time will tell whether or not such changes will increase the quantity of alimony modification requests for divorce agreements which exist under the current laws.
Whether you are expecting to be the payer alimony as a part of your divorce settlement agreement, or expecting to be the recipient of alimony as a part of your divorce settlement agreement, the most important things you can do for your divorce is to speak with a skilled, knowledgeable and experienced divorce attorney regarding your options.
Contact Our Woodland Park Spousal Support and Divorce Attorneys Today
At The Montanari Law Group, our alimony agreement lawyers have vast experience serving clients from Passaic County communities including Woodland Park, Clifton, West Milford, Wayne, Little Falls, Paterson, as well as all of Northern New Jersey. We are dedicated to finding highly personalized and effective legal solutions for all of your divorce and family law needs. Over the past decade, our attorneys have helped countless clients navigate complicated divorces.