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Proposed tax changes may make a contested divorce more costly

Though the old saying that two can live as cheaply as one was once a popular quote when a couple spoke of getting married, the reality is that living well requires both financial and emotional stability. If the relationship starts to deteriorate, then the emotional costs may become unsustainable. Now, if congress acts on the proposed tax law changes, then some California spouses could end up paying a higher monetary price in the event they are involved in a contested divorce.

Lawmakers are currently working on revisions in the tax codes that may affect millions of residents across the country. One of the proposed changes involves rewriting how divorced couples are taxed. Under the current law, when one spouse is ordered to pay alimony, he or she is permitted to deduct the amounts that were paid to the former spouse. The one receiving these monies would then have to count it as taxable income.

However, under the new plan, the taxes would be shifted to the paying spouse, who is usually the one with the higher income. And the one who receives alimony would not have to pay taxes on it. Some are referring to this proposed change as a divorce penalty.

If the proposed changes are passed and become effective in the new year, the government is expected to see an increase in tax revenue of approximately $8.3 billion over the next 10 years. It is unclear at this time whether these changes have already been approved. Regardless of the changes in tax codes, California spouses who feel trapped in an unhappy marriage are entitled to find a way to attain their happiness and peace of mind once again. In the event that an impending separation will result in a contested divorce, either party may benefit from seeking the input of an attorney who is well-versed in California's divorce procedures.

Source: New York Post, "GOP tax plan will make your divorce suck even more", Bob Fredericks, Nov. 3, 2017

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Phone: 916-905-4805
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