Couples in Nevada who have been experiencing marital problems may find themselves considering divorce. While divorce is a serious matter that requires careful consideration, recent changes to the tax code may cause some couples to hasten the separation process.
Until the recent federal tax code reform, an ex-spouse paying alimony could deduct those payments from taxable income. Alimony payments were counted as taxable income for the recipient.
Beginning in 2019, however, people who disburse alimony will no longer be able to write these payments off. Instead, the recipient will be able to accept spousal support as tax-free income. Divorces that are finalized prior to 2019 will be subject to the old rules and the payments will remain tax deductible for the payer for as long as alimony is required.
Spouses who are the higher earners in a marriage may decide to speed up a divorce so that they can reap the tax benefits of paying alimony. Conversely, a spouse who suspects that they are entitled to alimony payments may be reluctant to finalize an agreement until the new tax rules come into play. While most couples prefer to resolve divorce matters quickly, this tax deadline may further complicate things.
Individuals who are considering divorce and the related tax implications may benefit from speaking with a family law attorney. The lawyer may be able to review a client's case and make recommendations regarding financial negotiations and child custody. An attorney could also assist in quickly resolving a divorce while ensuring an equitable distribution of marital funds.