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How the New Tax Bill Can Affect Your Marriage or Your Divorce

The new tax bill, officially named the Tax Cuts and Jobs Act, was signed into law by President Donald Trump on December 22, 2017. Among many of its sweeping changes are provisions that may affect your domestic situation, including when to get married or when to get finally divorced. Seek the guidance of your family law lawyer regarding this.

Under the old (now expiring) law, many two-income couples end up paying more in taxes when they get married, compared to when they paid individually as single persons. The new law eliminates what is in effect a marriage penalty for couples making less than $600,000 combined annual income. If you’ve delayed on the nuptials because of a tax hit, 2018 might be the year to tie the knot. But take note: those individual tax-rate changes are scheduled to “sunset,” or expire in 2026.

If you earn a combined income of over $600,000 per year, you may still take a tax hit by being married.

Married couples take may take a tax hit in another way under the new bill—namely, because of the cap on state and local tax deductions. Whereas married couples are limited to $10,000, two single people can deduct $10,000 each.

If you’re in the process of divorce, the new bill can affect taxability or tax deductibility of alimony, also known as spousal maintenance or spousal support. This is an additional concern for a family law attorney weighing potential settlements and resolutions.

Under the new law, divorced taxpayers who pay alimony will no longer be able to deduct those payments from their income. Recipients of alimony are also no longer required to report the money as income. However, the provision has a delayed effective date and only applies to divorces finalized after Dec. 31, 2018. You might want to speed up or else delay your proceedings, depending on whether you are going to pay or receive spousal maintenance.