As if going through a divorce may not be difficult enough for former Arizona couples, the change in tax laws starting Jan. 1, 2019, may make it even more difficult for former couples to move forward. The tax changes will have financial impacts on many divorce issues that are often sticking points, including alimony, ownership of the family home and custody of the children.
When it comes to alimony, also called spousal support, the paying former spouse will not longer be able to deduct those payments from his or her income. This can push the person into a higher tax bracket so that he or she ends up paying more in taxes. On the flip side, this could result in lower alimony payments.
Going forward, keeping the family home and having primary custody of the children may be more expensive. For example, the 2019 tax code reduces the amount of property taxes and mortgage interest a person can deduct from his or taxes. This makes the home more expensive to keep. Similarly, the 2019 tax code eliminates the multiplier for the number of children a parent has. However, this may make the parent eligible for additional child tax credits.
The tax law changes can make even an amicable divorce more complex, especially when it comes to spousal support or keeping certain marital assets, like the home. Because there are major financial implications regardless of when a former couple starts the divorce process, a family law attorney may help a person understand how keeping the home, having primary custody of the children and seeking alimony may impact the person’s immediate and future finances. In some cases, the attorney may be able to offer advice so that the person has a more positive outcome once the divorce is finalized.