How the New Tax Laws Impact 2019 DivorcesJanuary 29, 2020 2:16 pm Leave your thoughts
Tax season is here. If you’re like most people, you’re scurrying about organizing documents on student loan interest, interest paid on your mortgage, charitable deductions, and the slew of other details needed to ensure your CPA gets the job done right. And, if your divorce was finalized in 2019, chances are you’ve wondered how the new tax laws will you.
While it’s critical that your tax professional understands the new tax laws and how they apply to those who have gone through divorce, it’s equally import that you know.
The new 2019 tax laws for divorced individuals are as follows:
Received Alimony is Not Considered Taxable Income
If you receive alimony, you’ll no longer be required to claim your alimony payments as income. The spouse paying the alimony will, however, be taxed (see next point). Note that this only counts for orders effective after December 31, 2018. Alimony paid, or received, under orders effective before then are deductible by the payor and reportable by the recipient.
Paid Alimony (spousal support) Is Not Tax Deductible
If you paid alimony to your former spouse you used to be able to deduct that. However, for orders effective after December 31, 2018, alimony payments made no longer count as deductions. This results in higher income individuals being taxed for alimony payments.
Child Tax Deductions Are Different
Each child no longer counts as a claimed dependent under the new tax law. Instead, claimed dependents count for a child tax credit that is counted toward taxes owed. Only one parent is permitted to claim a child as a dependent and that is the parent with whom the child lives for more than half of the year (majority of the year).
Important things to understand:
If your divorce was finalized at any time in 2019 (even December 31), you must file as a single person. Those who claim at least one dependent must file as head of household regardless of how long they were married. Finally, child support payments are not tax deductible.
New tax laws can be confusing. It’s important that you understand them and have people on your side who can properly advise you. Get in touch with our experienced New Hampshire divorce attorneys if you need help navigating these changes and, of course, properly vet the individual doing your taxes so you don’t run into trouble down the line.
This post was written by Cohen and Winters