Sharing the wealth may take on a whole new meaning come the new year. As of Jan. 1, newly divorced Massachusetts residents will be experiencing alimony payments in a new way thanks to the federal government. The person making payments will no longer be entitled to a tax deduction while the person receiving the money won’t pay any tax on it at all. So, those couples who are thinking about divorcing using the current system had better have their divorces finalized prior to the beginning of 2019.
Experts are wondering how the changes will affect actions at divorce settlement negotiating tables. The tax break has been a useful bargaining tool, especially in high asset divorce cases. The area is still somewhat gray when it comes to how the new rules will affect prenuptial agreements already in place. The bottom line still is the one who has the most may be required to pay, while the other may be entitled to receive.
If a business is involved, it may make matters even more confusing since the value of a business plays into support payments — including child support. It is uncertain how changes to taxation around alimony will affect the cash flow of a business. It is a wait and see game until tax returns are filed.
There may be some confusion and speculation caused by the new alimony structure. Those who have questions may find the answers by getting the advice of a Massachusetts attorney. The new laws may require extra time when it comes to ironing out the details in individual cases. A lawyercan review a client’s unique case and make suggestions regarding the impending new rules.