It may seem hard to believe, but 2018 is already more than halfway over, and 2019 is looming. For people in Los Angeles trapped in unhappy marriages, they may be eager to divorce. While all divorce issues should be carefully thought out, there could be advantages to finalizing for divorce before the year's end.
First, federal tax law has changed in a way that majorly shifts the tax status of spousal support payments. Currently, the party paying spousal support can deduct these payments on their annual income taxes, while the party receiving spousal support must include those payments as taxable income. However, starting January 1, 2019, the party paying spousal support will no longer be able to deduct these payments on their annual income taxes and the party receiving spousal support will not need to report it as taxable income. Because divorces finalized prior to January 1, 2019, will be grandfathered into the old tax laws, if these changes pose an issue to a divorcing couple, they may want to finalize their divorce sooner rather than later.
Second, one major sticking point when it comes to property division and divorce is what to do with the family home. Spouses will have to decide whether one of them will keep it or whether they will sell it and split the proceeds. But, the new tax laws to take effect in the New Year reduced the deductibility of property taxes, as well as upped the amount of mortgage it takes to apply the interest deduction. What this comes down to is that starting in January, it will become more expensive tax-wise to be a homeowner. Spouses will need to keep this in mind when deciding whether to fight for the family home.
These are just two points that couples going through a divorce should keep in mind. For some of them, these changes to current tax law warrant finalizing their divorce in 2018. Others will decide that it is better for them to take their time settling divorce legal issues, even if the divorce is not finalized in 2018. These are very personal issues that will vary based on each couple's personal circumstances. But, by having a solid grounding on both current law and 2019 law, couples can make decisions that are in their best interests.