Many people have considered alimony a negotiation tool during divorce cases for decades. Though a person may have cringed at the thought of having to continue supporting an ex-spouse, the paying individual may still have appreciated the ability to deduct those payments come tax time. However, now that 2019 is underway, that ability no longer exists.
You have likely heard that tax law changes were coming into effect that would affect alimony in New Jersey and across the country. You may not have known exactly how or even if it would affect your divorce outcomes. Gaining information on the changes may help you gain a better idea of what you could face if the court awards alimony in your case.
Are you already divorced?
If you and your ex-spouse finalized your divorce before the end of 2018, the old tax laws regarding alimony will still apply to your situation. While this information may bring about a sigh of relief -- after all, tax season quickly approaches -- you need to remember that any modifications made to your divorce agreements could result in the new laws taking over. Changes made during or after 2019 may cause the new alimony tax laws to take precedence if the modification includes this stipulation.
What will the changes mean?
If you have not yet finalized your divorce, and alimony is likely to result, you need to understand what the changes may mean for your circumstances. If you earn more money than your spouse or the court finds other reason to believe that you should continue providing spousal support, you would have to pay the designated amount to your ex, and you would also have to pay taxes on that amount despite it no longer belonging to you.
What can you do?
As you can see, this type of scenario may make you feel less willing to pay alimony. As a result, the divorce process may become more contentious. However, you do not have to resign yourself to paying alimony and the taxes on it. Instead, you may have the ability to negotiate terms that would allow you to give your ex-spouse another asset in exchange for not having to pay alimony or for at least paying less.
While you may not necessarily want to go through a contemptuous divorce, you certainly do want to work toward the outcomes that will best suit your interests. Therefore, you may want to discuss these law changes with your divorce attorney and determine what other actions you could take to protect your assets and your interests.