On New Year’s Eve, some couples in Virginia toast the occasion with a glass of champagne and a kiss. However, some couples are preparing to divorce and go their separate ways. However, they should be aware that in 2019 some significant changes in federal tax laws will go into effect that could impact certain divorce legal issues, including spousal maintenance and child custody.
In 2019, the old spousal maintenance tax laws will change significantly. Prior to 2019, the spouse paying alimony was able to claim such payments as tax deductions and the spouse receiving alimony had to report these payments as taxable income. However, starting in 2019, the spouse paying alimony can no longer claim such payments as tax deductions and the spouse receiving alimony no longer must report these payments as taxable income.
Child custody issues are also affected by the new tax laws. Starting in 2019, the child tax credit will double from $1,000 per child to $2,000 per child. When parents divorce, they will need to decide which of them will claim the child tax credit, so this increase could have a major influence on that decision. Keep in mind that single parents earning more than $200,000 annually cannot claim the credit.
So, a couple divorcing in 2019 will face a very different tax landscape than couples divorcing in 2018 had. It is essential for any divorcing couple to understand the impact the divorce will have on every aspect of their life, including important tax changes that may come into play.