Divorce negotiations set to take a major turn
Couples in Illinois who choose to end their marriages known that negotiating the terms of a divorce is never easy. However, after the change from 2018 to 2019, it could get even harder to come to an agreement on how to split assets and debts and whether or not one person will pay spousal support.
According to Bloomberg, a big change in the tax code that will take effect on January 1, 2019 is likely to have as big of a change on divorce negotiations as it has on income taxes. Under the Tax Cuts and Jobs Act, the spouse who is ordered to pay alimony to their ex will now not only hand over money to that person but then turn around and pay income tax on the same money. This is in stark contrast to the way things have been for multiple decades where the spouse who paid alimony received an income tax deduction.
The ability to deduct money paid out in spousal support from a personal tax return was often used as a way of getting one spouse to agree to the alimony payments. Without that concession, people might be far less willing to agree to such terms in a divorce. This could have ripple effects for both spouses as the path to a divorce settlement may be more complex than it has been.
Many couples are said to be working hard to complete their divorces before the end of 2018 to avoid dealing with the new law and to take advantage of the current deduction system.