Now that the new tax bill has passed, the following are the changes which appear to us to have the most significant impact on couples divorcing:
1) Spousal maintenance, AKA alimony, will no longer be deductible to the payor and will no longer be taxable to thereceiver. A huge change to a tax policy that has been in effect since 1942. This change will go into effect in January, 2019. It’s not totally clear whether the new law will be applied to modifications of prior year divorces. The language for modifications appears to say that the modifications may be impacted if the language in the modification order says specifically that they will be.
2) For couples with children, the Child Tax Credit will increase to $2,000.00.
3) Deductions for property, state, and local taxes will be limited to $10,000.00 per year for those itemizing.
4) Home equity loan interest will no longer be deductible.
5) The Head of Household filing status which at an earlier stage of the bill was going to be eliminated has apparently been retained and increased. This affects single parent households.
We all will have to stay tuned to find out all the details and other provisions that are in the tax bill since only the highlights have been publicized to date.
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