Many Washington residents will navigate the divorce process before year’s end. In cases of high asset divorce, various financial matters may be key factors in achieving fair and agreeable settlements. There are rumors of possible changes in federal tax laws that have many spouses concerned, especially those who pay or think they will be ordered to pay alimony.
As it stands, those who pay alimony are usually able to claim deductions on their income tax returns. For instance, a man in another state who was ordered to pay $60,000 per year to his former wife was able to deduct the amount on his tax forms. In actuality, he only paid $40,000 out of pocket.
Some say newly proposed revisions to the Internal Revenue Code may eliminate the ability to claim such deductions. This would no doubt bear significant impact on many people’s finances who currently pay alimony. A professor of matrimonial law at a university in another state says she believes not only would such tax reforms make people less likely to agree to alimony payments but would also possibly lead to judges ordering less alimony overall. Interestingly, in 2015, the IRS reported that as many as 12 million people claimed deductions for alimony on their tax forms while only approximately 10 million people claimed alimony as income.
A high asset divorce is often easier to process if those involved rely on experienced legal representation in court. Although there are specific guidelines and regulations governing such matters, many divorce situations are negotiable. A Washington family law attorney can act on behalf of a client to help obtain a swifter, more agreeable outcome in an alimony dispute or any other finance-related matter in divorce.
Source: CNBC, “Is tax reform the final straw for alimony?“, Nov. 10, 2017