Getting a divorce is not something most people in Virginia ever think about rushing to do. However, with the looming introduction of the new tax law on January 1, 2019, some couples may well be doing just this. The reason for this is that the way in which alimony payments will be taxed is going to change significantly when the calendar turns to a new year.
Instead of the person who receives spousal support paying income tax on the money, the person who pays spousal support will be paying income tax on the money. This will apply to any divorce finalized in 2019 even if it was initiated in 2018. It may also apply to any divorce agreement finalized before 2019 but that has been modified in 2019. One may consider that the government is looking at alimony as a way of getting more tax income.
This is because the paying spouse generally has a higher tax bracket than the receipient spouse. With this in place, the government may receive more tax income on the same money if the taxes are paid by the payor. However, what may also end up happening is that spouses may not be so willing to agree to the same spousal support terms that they would have when they were able to deduct the money. This may then reduce even further the amount of money the person who would receive alimony may get.
Couples who are contemplating a divorce may want to talk with a lawyer in Virginia to learn more about how this change may impact them.
Source: News4Jax.com, “‘Races to courthourse’ expected before new alimony law takes effect,” Nikki Kimbleton and Jodi Mormonn, April 3, 2018