Henry + Dow
Call Today for a Consultation
Tulsa 918-933-4333
OKC 405-605-0681

Settle For Nothing Less
Than Success

Planning for divorce amid changing tax laws

People in Oklahoma who decide to end their marriages may seriously consider how changes to the tax laws will affect their divorce. In late 2017, Congress passed the Tax Cuts and Jobs Act, best known for its changes to income and corporate taxes. One provision affecting divorcing couples will go into effect with the new year. Many couples escalated their divorce timeline in order to finalize a settlement before the end of the year. While the new rules will apply to all divorces finalized on or after Jan. 1, 2019, they will not affect people who completed their separation in 2019 or earlier.

For decades, alimony has been treated consistently under federal tax law. The payer of spousal support can deduct the payments from his or her gross income, resulting in substantial tax savings for a wealthy person. In addition, the recipient would pay taxes on the funds as part of his or her income, typically in a lower tax bracket. As a result of the overall tax savings afforded by this option, wealthy spouses had a significant incentive to agree to generous spousal support payments as part of the divorce settlement.

The new tax law changes this approach. Instead, the payer will no longer receive a tax deduction for alimony payments. The recipient will also receive the funds tax-free. While this may seem to be a windfall for recipients, divorce lawyers caution that it is likely to make negotiations more difficult and reduce the overall amount of alimony paid.

The financial aspects of divorce can be some of the most difficult, leading to long-term effects that persist after other issues are resolved. A family law attorney might be able to help people to understand the changing laws and work to achieve a fair settlement on critical issues, including spousal support and property division.

No Comments

Leave a comment
Comment Information
Email Us For A Response

Get Answers Today

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Tulsa, OK Office
1616 South Main Street
Tulsa, OK 74119

Phone: 918-933-4333
Fax: 918-512-4461
Tulsa Law Office Map

Oklahoma City, OK Office
1611 N Broadway Ave
Suite M
Oklahoma City, OK 73103

Phone: 405-605-0681
Fax: 405-594-6004
Map & Directions

Norman, OK Office
480 24th Avenue NW
Suite 200-5
Norman, OK 73069

Phone: 405-605-0681
Fax: 405-594-6004
Map & Directions