As of December 31, 2018, the Tax Cuts and Jobs Act (TCJA) has changed which
tax benefits and exemptions are available to divorced couples. For example,
some of these provisions include noteworthy changes to alimony and dependent
exemption deductions. Before you file for divorce, it’s important
to know how this reform bill can impact your post-divorce life.
The purpose of alimony, or “spousal support,” is to provide
temporary or permanent financial aid to a lower-earning spouse. These
court-ordered payments are intended to help the payee adjust to their
single-income lifestyle. In the past, these payments were taxable to the
payee and tax deductible for the payor. As of January 1, 2019, this standard
will no longer apply. On another positive note, this means that divorcing
couples don’t need to worry about structing their alimony to reflects
current tax laws.
Dependent Exemption Deductions
The TCJA has eliminated all personal and dependent exemption deductions
as of January 1, 2019. This means that parents can no longer claim children
as dependents on their tax returns.
Child Tax Credit Rules
The Child Tax Credit is awarded to parents with qualifying dependents under
the age of 17. To offset the loss of dependent exemption deductions, the
TCJA is doubling the maximum child credit to $2,000 per child. Plus, up
to $1,400 of this amount can be collected as a refundable credit. Unfortunately,
it’s estimated that very few low to moderate-income households earn
enough money to benefit from this provision.
Discuss Your Case with a Knowledgeable Divorce Attorney Today
Divorcing couples need to make countless legal and financial decisions
before they can start the next chapter of their lives. If you have any
questions about the TCJA or are preparing to file for divorce, contact the
Temecula divorce attorneys at Hanson, Gorian, Bradford & Hanich today. Our experienced legal
team has a comprehensive understanding of the state and federal laws associated
with divorce and family law. We can guide you through each step of this
legal process and help you secure a marital settlement agreement or divorce
decree that safeguards your standard of living.
Contact Hanson, Gorian, Bradford & Hanich at (951) 687-6003 to schedule a consultation.