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Filing for divorce? Consider the tax impacts

There are many impacts that divorce can have on anyone's life. For most people, it can feel hopeful to look forward to life as single individuals, but it can feel stressful to consider the financial ramifications of filing for divorce. In particular, taxes could play a major role in how some California residents make decisions during the process.

First, tax laws regarding alimony have changed. The changes will take effect on Jan. 1, 2019, and it will require the payor to maintain the obligation of paying taxes on the money rather than the recipient. However, at this time, the recipient is still responsible for applicable taxes on spousal support, so if parties would like their terms to avoid falling under the new law, they may wish to get their final divorce decrees regarding alimony in before the year comes to a close.

Other tax law changes can have impacts as well. For instance, property tax deductions and mortgage interest deductions are now lower under new tax laws. This means it costs more money to maintain a home, which can be even more difficult on a single income. As a result, individuals who are considering keeping the home after divorce may want to reconsider whether they have the means and desire to handle the tax implications of that asset.

While filing for divorce may have been the best choice for this situation as a whole, it means that other difficult choices will also need to be made. For California residents wanting to make sure that they lessen the financial blows as well as possible, it makes sense to learn more about new tax laws and how they can affect divorce outcomes. Additionally, concerned parties may want to speak with their legal counsel about the best avenues for achieving the results they desire.

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