If you are considering a divorce, now may be the time to move forward. Divorces with possible alimony payments are about to pass an expensive deadline.
The Tax Cut and Jobs Act takes effect on January 1st, 2019. As you may know, this law removes alimony from the list of tax-deductible expenses.
The act will make alimony a more expensive proposition, but only impacts divorce finalized after December 31st, 2018.
Because California requires a six-month waiting period for finalizing a divorce, filing after June could be too late. For anyone going through the process of divorce, the December 31st deadline is a good one to aim for.
Divorces that involve alimony payments have an added incentive to finalize sooner rather than later. With the new tax law taking effect, both sides of an alimony payment may want to hurry the process along.
Currently, alimony payments are tax-deductible. This means less money makes its way to the federal government and more stays with both parties. When the law changes, it may affect how much judges award in alimony payments. It also could affect the duration someone is required to pay alimony.
There could also be a temporary increase in lump-sum agreements to avoid this new alimony tax. A lump-sum alimony is paid all upfront and could avoid the new tax standards.
Lump-sum payments made before the tax law is enacted may not face the same costs as those moving forward.
All of this adds up to the possibility of increased divorce filings for California in June, and a national increase throughout the next couple of months.
If you have been considering a divorce, or have any questions about the process, now is the time to talk to an attorney experienced in family law.