If you were not able to finalize your divorce before midnight on New Year’s Eve, you will have to face the new laws that went into effect on Jan. 1, 2019. You have many concerns to address, especially if you and your spouse are dealing with a high-asset divorce.
Whether you are a physician, CEO, public official, athlete or small business owner, divorce and the resulting property division may seem overwhelming. Here are four new concerns to keep in mind, courtesy of the new tax laws.
1. A change in alimony taxes
One of the big changes for 2019 will affect alimony, sometimes called spousal support. Prior to 2019, the party who paid alimony was able to claim a tax deduction while the payee had to pay tax on the amount received. The new law reverses that, and the recipient may receive less alimony than before.
2. Taxing the family home
The family home is always a big issue in terms of property distribution. The new law reduces the deductibility of your property taxes as well as the amount of mortgage that will qualify for a deduction of interest.
3. Losing the multiplier for children
The new law throws out the personal exemption for 2018 to 2025. You will not be able to use a multiplier for your children in terms of a tax return deduction. However, the parent who claims the kids in the divorce may be eligible for child tax credits, which are more generous under the new law.
4. The risk to your prenup
Your prenuptial or postnuptial agreement may play a role in your divorce, but you should have your attorney review this document. The new tax law may serve to neutralize some of the items. and in view of your divorce, updating may be necessary.