Once the decision to get divorced has been made, some couples in Florida almost seem to rush into getting things taken care of while others may drag their feet before even being willing to consider filing an initial petition for dissolution. There is certainly no right or wrong to either approach per se but this year if one or both partners in a marriage believes that the heretofore standard system of how taxes and alimony are handled is right for them, waiting could end up being rather costly.
As explained by CNBC, any divorce that is finalized after December 31, 2018 will find alimony payments subject to a very different taxation model. Instead of the paying spouse deducting this money from their tax return and the recipient spouse, who is likely in a lower tax bracket, paying the income tax, it will be the paying spouse in the likely higher tax bracket who will get hit with the tax liability for these payments.
If a divorce may take several months to finalize then anyone wanting to leverage the current system needs to get started now. This change may end up leading many couples down a very different divorce settlement path where alimony no longer even figures in and in its place is some form of lump sum payment.
People who are contemplating or who have made the choice to get divorced may find a consultation with a family law attorney a useful way of understanding how the alimony tax change might affect them in their upcoming divorce.