Some Florida spouses can save on taxes if they divorce this year

Some Florida spouses can save on taxes if they divorce this year

| Jun 2, 2018 | family law

The recent Tax Cuts and Jobs Act will lead to significant changes for many spouses. Specifically, individuals who divorce and make alimony payments will lose the ability to claim those expenses as tax deductions. The new roles take effect for all divorces made final after Dec. 31, 2018. That means that Florida spouses who are considering divorce should make a decision and begin the process as soon as possible in order to preserve this tax advantage.

The year may not be halfway over, but only those divorce cases that are finalized before the end of the year will be eligible to claim alimony as a tax deduction. That means a proactive approach is required. In many cases, divorces take longer than anticipated, so the sooner the process begins, the more likely it is to end before the last day of 2018.

Currently, individuals who make alimony payments can claim those payments as tax deductions, while those who receive alimony must claim the payments as income and pay taxes accordingly. Once the new changes take place, spousal support will become tax neutral. That could be a significant financial change for spouses making alimony payments.

Florida couples have numerous options when it comes to structuring their divorce agreement. In some cases, a lump sum payment may be more attractive than ongoing monthly alimony payments. Other couples may choose to divide property in a way that addresses the contributions of one spouse in supporting the career of another. Having this flexibility is a great thing, but it’s important for spouses to understand that time is running out in regard to the ability to claim alimony as a tax deduction.

Source: cnbc.com, “Act now if you want to keep this tax break when getting a divorce“, Lorie Konish, May 31, 2018