Specific examples of why to visit a lawyer
May 21, 2018 15:17:56 GMT -5
DryCreek, greatcoastal, and 5 more like this
Post by shamwow on May 21, 2018 15:17:56 GMT -5
This one applies to folks in the USA only.
www.marketwatch.com/story/new-tax-law-eliminates-alimony-deductions-but-not-for-everybody-2018-01-23
If your divorce is executed after 12/31/2018, spousal support (alimony) will no longer be tax deductible and will be considered income to the payer. OK, Shammy, so what? I'm glad you asked...
Traditionally, child support is considered income to the payer and spousal support is considered income to the payee. Why does this matter? Let's say you're paying $1000 / month in spousal support.
$1000 * 12 = $12,000
Now let's say that you had a 20 year marriage. These are typically considered "long term" and spousal support is typically paid for half the length of the marriage. In this example 10 years.
$12,000 * 10 = $120,000
Let's say your average tax rate (include social security and state taxes here) is about 20%. If you complete your divorce after 1/1/2019, you will no longer be able to take this as a tax deduction.
$120,000 * 20% = $24,000
So this means if you are planning on getting divorced and it isn't executed before 12/31/2018, plan on losing that tax deduction and having to cough up a lot more money to the government during the time you're paying spousal support.
On the other hand....
If you're planning on RECEIVING spousal support and can delay the execution date until past 12/31/2018, that would reduce your taxable income and save you tons of money.
Of course, if you live in a state with no spousal support (such as mine), this entire point is moot. So maybe you lose tens of thousands, maybe you gain tens of thousands, maybe it doesn't make a hill of beans difference.
This is just ONE reason why seeing an attorney is a really good idea, isn't it? You don't have to do anything with the information you learn, but you will actually learn something about your specific situation.
This seems like a fun game. Anyone else have other examples?
www.marketwatch.com/story/new-tax-law-eliminates-alimony-deductions-but-not-for-everybody-2018-01-23
If your divorce is executed after 12/31/2018, spousal support (alimony) will no longer be tax deductible and will be considered income to the payer. OK, Shammy, so what? I'm glad you asked...
Traditionally, child support is considered income to the payer and spousal support is considered income to the payee. Why does this matter? Let's say you're paying $1000 / month in spousal support.
$1000 * 12 = $12,000
Now let's say that you had a 20 year marriage. These are typically considered "long term" and spousal support is typically paid for half the length of the marriage. In this example 10 years.
$12,000 * 10 = $120,000
Let's say your average tax rate (include social security and state taxes here) is about 20%. If you complete your divorce after 1/1/2019, you will no longer be able to take this as a tax deduction.
$120,000 * 20% = $24,000
So this means if you are planning on getting divorced and it isn't executed before 12/31/2018, plan on losing that tax deduction and having to cough up a lot more money to the government during the time you're paying spousal support.
On the other hand....
If you're planning on RECEIVING spousal support and can delay the execution date until past 12/31/2018, that would reduce your taxable income and save you tons of money.
Of course, if you live in a state with no spousal support (such as mine), this entire point is moot. So maybe you lose tens of thousands, maybe you gain tens of thousands, maybe it doesn't make a hill of beans difference.
This is just ONE reason why seeing an attorney is a really good idea, isn't it? You don't have to do anything with the information you learn, but you will actually learn something about your specific situation.
This seems like a fun game. Anyone else have other examples?