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Tax law flips alimony liability on its head

Divorced or would-be divorced couples in Connecticut may want to take note about a change that is looming regarding how spousal support payments will be taxed once the Tax Cuts and Jobs Act goes into full effect on January 1, 2019. 

As explained by the Internal Revenue Service, the current law assigns tax liability to the spouse who receives alimony payments. In addition, the IRS allows the spouse who must make spousal support payments the ability to deduct these payments from their federal tax returns. This arrangement has been integral into the development of many divorce settlements as taxation is one element considered when both sides in a divorce evaluate their full agreements that include not only alimony but property division and potentially even child support.

Alimony and tax responsibility

Connecticut spouses who are considering a divorce this year or possibly next year in 2019 should take the time to evaluate a rather significant change in the tax code that may have major implications for the outcome of their divorce settlement. 

As explained by the Internal Revenue Service, when a divorce decree today involves the order that one spouse make alimony payments to the other spouse, the person who pays the alimony does not have to pay income tax on the funds. Instead the person who pays spousal support actually may deduct the income from their tax return. The person who receives alimony payments must then claim that money as income on their tax return and therefore is responsibility for the income tax on the funds.

Legal rights for unmarried couples

Connecticut couples may not always think about their legal rights. However, if a couple is not married, they may need to pay closer attention to these rights.

People may intend to leave all of their assets to their partner after they die. According to Time magazine, unmarried couples typically need to ensure that their partner is listed as the heir on a will. Additionally, this partner usually needs to be listed as the beneficiary on life insurance and retirement benefits to receive these assets. Without some form of documentation, a person's assets are usually subject to Connecticut intestacy laws, and the assets might instead go to his or her siblings.

Arbitration in a high net worth divorce

Divorce is a difficult and emotionally charged time, made even more complicated and stressful when the couple going through the divorce has a high net worth. With financial futures at stake, decisions made during the divorce process are absolutely critical. 

When a couple is unable to find common ground and proceeds to a contentious, drawn-out court battle, the expense and anguish can become practically unbearable. However, if a couple is willing to look at alternative dispute resolution, such as arbitration, it may help reduce much of the high costs and heartache.

Connecticut offers hope to gay would-be parents

People in Connecticut who are gay or lesbianand who want to start a family like their heterosexual counterparts know that their road to parenthood may be long and arduous. However, the desire to enjoy this part of life is understandable and many have found ways to do this successfully.

In fact, it appears that more people in gay or lesbian relationships and marriages have been able to become parents in Connecticut in large part thanks to the state's support of such endeavors. At one clinic near Norwalk a doctor who works at the clinic indicated that in just a few years the percent of gay and lesbian parents there has increased roughly 80 percent. A hospital in Greenwich where helping lesbian couples give birth has been ongoing is now also more recently known as a safe and loving place for gay men to bring their children into the world.

What you need to know about gestational surrogacy in Connecticut

Surrogacy law varies dramatically from state to state. Some states have enacted extremely prohibitive laws concerning surrogacy contracts and the rights of no-biological parents in such arrangements.

Connecticut is a comparatively surrogacy-friendly state. Couples seeking to conceive a child through surrogacy in the nutmeg state are afforded a number of protections. Today we examine the Connecticut laws surrounding gestational surrogacy.

Understanding the QDRO in a divorce

Residents in Connecticut who get divorced know that there will be many new things to learn and decisions to make. One of the difficult parts of ending a marriage is deciding how the couple's assets and debts will be split between both parties. It is important for spouses to know that making this decision requires not simply agreements between each other but may also require that they follow certain processes in order to avoid unforeseen pitfalls.

When it comes to dividing retirement assets, this is especially important. As explained the U.S. Department of Labor, a 401K account owner is generally the only person legally allowed to take money from that account. In addition, if the account owner withdraws money to pay to a spouse for a property division settlement, that owner may end up having to pay not only taxes on the distribution but also penalties if they do not meet retirement criteria.

The FAFSA and custodial parent

College financial aid applications can be confusing for both you and your children. Even some that may seem relatively easy, such as the FAFSA, are full of nuances you and your child may not have considered.

For example, who is the "custodial" parent? It could be that your child views the custodial parent as both of you if you have joint custody. Or it could be that you view yourself as the custodial parent because you have legal custody even though your child lives with you less than half of the year. Perhaps your ex views himself or herself as the custodial parent because it is he or she who claims your child as a dependent on taxes. Here is a look at whom to put down as the custodial parent.

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