When considering divorce, you will likely feel overwhelmed, exhausted and confused. Thinking about alimony, money, property, debts, custody, visitation and your family’s well-being can feel like crushing weights on your shoulders. Now, if that wasn’t enough, you also need to think about the consequences that the new tax law may have on your divorce and financial future.
Recent taxation modifications made at the Federal level are causing a bit of head scratching because of the major changes in the handling of alimony payments.
Does this mean that you may want to delay or speed up your divorce plans? We’ll talk about it in this issue.
What is Alimony?
Under Florida law, alimony is legally required financial support made by someone to his or her former spouse for either a specific amount of time or permanent. Courts will consider a host of factors to determine the amount to be paid, including the:
- length of the marriage;
- financial resources of both parties;
- standard of living established during the marriage;
- earning potential of both parties; and
- age of and health condition of both parties.
One question I am almost always asked by couples is how can we figure out the proper amount of Alimony? I wish there was a formula like the one used to calculate child-support because that would make the process so much simpler. However, since that does not exist, I work with couples to balance the factors above (and the other ones listed in Florida law) to help couples figure out an amount and time-frame that is fair and equitable to both the paying-spouse and the recipient.
The topic of Alimony almost always causes a strong eruption in emotions during mediation as the spouse paying invariably feels that they are paying too much, and the spouse receiving usually feels they did not receive enough. As your Mediator, I work hands-on with both spouses to find a middle-ground that works for both spouses.
How will Alimony change with the new tax law?
Before the new tax legislation passed, the person responsible for paying the alimony was generally entitled to count it as a tax deduction on their personal tax return. Likewise, the spouse receiving the alimony was generally required to report it as taxable income. For both parties, this reciprocal handling of taxation for the alimony payment made sense and seemed fair.
Under the new law, however, the person paying will no longer be able to claim it as a deduction. Likewise, the payments will be tax-free to the person receiving the payment. Now when I work with couples, there is an added strain on the negotiations because of this new taxation rule.
The new tax laws will affect divorces finalized as of Jan. 1, 2019. The previous tax law will still govern divorces finalized on or before Dec. 31, 2018. As a result, many experts are expecting a rush of divorces in late 2018. In fact, many of the couples contacting me and choosing the route of a PeacefulSplit™ Mediation because they want to take advantage of the current tax law.
Will the new law affect my divorce?
For the party required to pay alimony, the divorce just became much more expensive. In addition to paying a specified amount, he or she will also have to pay its associated income taxes. For this reason alone, it’s likely that alimony will become an even bigger challenge for couples to agree about. For the paying-spouse, the true cost of alimony will be more expensive, and for the recipient-spouse, the true value of the payment will be more valuable.
The new taxation law recently passed. So far, Florida has not adjusted the way alimony impacts the calculation of child support. Currently, it is still counted as income to the recipient-parent as as an expense to the paying-parent.
Here at PeacefulSplit™ Mediation, our sole mission is guide, comfort, and assist you and your spouse or partner so that you can obtain a peaceful divorce. Most importantly, we never judge you based upon your values, beliefs, culture or sexual orientation.
If you and your spouse are ready for aPeacefulSplit™ Mediation, or are just contemplating divorce, I am here to help by answering all of your questions and explaining to the both of you the benefits of aPeacefulSplit™ Mediation. Sometimes both parties are on the same page, and often they are not. I am available to help you under either scenario.
If you are ready to divorce, want to avoid a financially and emotionally draining legal battle, and desire an economical “PeacefulSplit™ Mediation” or just want more information about the divorce mediation process, then Attorney and Florida Supreme Court Certified Family Mediator, Eric B. Epstein, Esq., is ready to assist you. I can be reached at 954-272-8292.