{"id":909,"date":"2019-03-18T19:45:36","date_gmt":"2019-03-18T19:45:36","guid":{"rendered":"http:\/\/s876455381.onlinehome.us\/?p=909"},"modified":"2020-05-14T20:48:54","modified_gmt":"2020-05-14T20:48:54","slug":"how-2019-divorces-are-affected-by-the-new-tax-law","status":"publish","type":"post","link":"https:\/\/frischfinancial.com\/staging\/how-2019-divorces-are-affected-by-the-new-tax-law\/","title":{"rendered":"How 2019 Divorces are Affected by the New Tax Law"},"content":{"rendered":"

[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”3.22″][et_pb_row admin_label=”row” _builder_version=”3.25″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”][et_pb_column type=”4_4″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_text admin_label=”Text” _builder_version=”3.27.4″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”]<\/p>\n

Will you be paying more?<\/strong><\/p>\n

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Breaking up is hard to do. Many times, when a marriage comes to an end and divorce proceedings begin, the business of dividing a couple\u2019s finances can be frustrating even in the most amicable situations. As a result of the Tax Cuts and Jobs Act of 2017, any divorce agreement signed after December 31, 2018 will be subject to some significant changes in tax obligations which could have serious impact on settlements.<\/p>\n

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Prior to 2019, alimony had been deductible for the payer and taxable as income for the recipient. That has now been changed. <\/em>Under the new tax law, alimony is no longer a deduction for the payer and is no longer taxable to the recipient. <\/strong>This is a major change which will likely affect the way attorneys negotiate on behalf of their clients. Existing agreements are grandfathered under the old law.<\/p>\n

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Let\u2019s review an example:<\/p>\n

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Joe is paying alimony. He is in the top 37% Federal bracket + 12% New York State\/City bracket = 49% combined Tax Bracket. His ex-spouse Deb is in the 22% Federal bracket + 6% New York State\/City bracket = 28% combined Tax Bracket.<\/p>\n

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If alimony is $100,000 and the divorce agreement was signed prior to 2019<\/strong>, the $100,000 would not be taxed by Joe, but instead taxed by Deb. ($100,000 * 28% (taxes) = $28,000 of estimated income taxes to be paid by Deb.)<\/p>\n

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If the divorce agreement was signed after 2018 <\/strong>the $100,000 would be taxed by Joe. ($100,000 * 49% (taxes) = $49,000 of estimated income taxes to be paid by Joe.)<\/p>\n

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Given this example, under the new amendments in the tax law, there would be $21,000 ($49,000 – $28,000) of additional taxes paid<\/strong> and this $21,000 is not available for either Joe or Deb!<\/p>\n

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What does this mean going forward?<\/strong><\/p>\n

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