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The last-minute rush to get divorced

| Nov 25, 2018 | Divorce & High Asset Divorce |

For some couples in Connecticut, the last several weeks of 2018 might look very different than anyone could have ever imagined. Instead of rushing to the mall, enjoying holiday festivities and working to salvage a marriage being primary activities, rushing to get divorced might be the focus. Generally speaking, divorces are not rushed nor are they the primary focus during holiday seasons but an upcoming change to the tax code is making this an unusual year indeed.

In just a matter of weeks, a divorced couple might find themselves paying more in income tax on alimony than they would if they completed their divorce in 2018 according to Bloomberg. This increased cost of alimony is thanks to the new tax law that shifts the burden of paying federal income tax on spousal support away from the recipient to the payor. Because the person who pays alimony is most often in a higher tax bracket than the person who receives spousal support, the amount of tax to be paid on the same amount of money would theoretically increase. 

Historically, the ability to deduct alimony payments from a tax return was one small concession that allowed a paying spouse to agree to alimony as part of a divorce settlement. Losing this deduction and paying the tax on top of paying alimony may well make those spouses unwilling to agree to such payments.

The new tax law may well change the face of divorce settlement negotiations. For divorces in the works that can be completed in 2018, an increased effort to do so may well be seen.