Current statistics reflect that married couples in Missouri and elsewhere across the country are staying together more than in recent years. While the Centers for Disease Control and Prevention reported a divorce rate of 45 percent in 2018, this number has been on a decline. Although fewer couples may be parting ways, it is still critical that those considering a divorce understand how updates to tax laws may affect them.
The finalization date of a divorce is a key factor to consider. For tax purposes, the Internal Revenue Service recognizes one’s marital status as of Dec. 31 of the tax year. Therefore, even if a divorce is in process, a couple is still defined as married if the divorce is not finalized by the end of year. Conversely, the marital status of a couple whose divorce was final by Dec. 31 is considered to be divorced by the IRS.
The Tax Cuts and Jobs Act made significant changes to the way alimony is addressed. Prior to the 2019 tax year, alimony payments were tax-deductible and those payments had to be reported as income by the recipient. The new law essentially reversed this, with the amount paid no longer deductible and the payment received not counted as income. Any divorces final before the end of 2018 can follow the older tax law, providing certain criteria established by the IRS are met.
Alimony is simply one issue to address when going through a divorce. A Missouri divorce attorney can provide guidance throughout the entire process. It is important to have a knowledgeable ally to protect one’s interests and ensure a favorable outcome in divorce proceedings.