When a couple decides to end their marriage, multiple decisions must be made. Often, even those couples in Missouri who are committed to an amicable split find themselves facing lengthy negotiations. For many, those negotiations were expedited by their desire to finalize their divorce before new tax laws go into effect in 2019.
The laws are part of the tax overhaul plan passed in 2017. Under current law, people who pay alimony can receive a tax deduction; those receiving it pay taxes on that income. This sometimes allows extra money as the person receiving alimony is often in a lower income bracket. The deduction also allows the payer to pay less in taxes, meaning there is more money between the two.
However, the new law goes into effect after Dec. 31, 2018. Under it, the payer will no longer receive a deduction, and the recipient will no longer pay taxes on it. Proponents of the bill are hopeful that it will generate $6.9 billion to cover the other tax cuts included in the bill. While some argue that it will simplify the tax laws, while others argue that it removes a negotiating tool and could ultimately result in the recipient having even less money.
As a result of the impending change, many family law attorneys say that they are working hard with their clients to finalize their divorce before the end of the year. While these changes may seem confusing to those in Missouri exploring their options, there are experienced professionals who can help. These professionals are dedicated to helping their clients seek a settlement that is fair.
