With changes to tax law set to take hold in 2019, Massachusetts couples who are dragging their feet through the divorce process might want to quicken their pace. Spousal support and property division in particular will no longer be quite as financially beneficial as they were in the past. However, couples who finalize their divorce before the end of the year will not have to worry about the upcoming changes.
Starting next year, individuals paying spousal support will no longer be able to deduct these payments on their taxes. Deducting support payments helps payers lower their overall taxable income, making alimony more affordable and realistic for them to pay. It also helps create an overall tax savings between the payer and recipient, as the spouse receiving and paying taxes on spousal support usually pays at a lower rate.
Keeping the family home might be less realistic, too. Under the new tax law, homeowners will see a reduction in their ability to deduct property taxes, and interest deduction for mortgages will also go down. For those considering keeping the marital home, it is important to understand that tax-deductible savings from previous years will likely no longer apply.
Couples who want to utilize the current tax benefits that come with divorce should be certain that they wrap things up before the end of the year. However, there is a difference between working quickly and rushing. Divorcees in Massachusetts are still well-advised to take care when determining important matters, including spousal support, property division and other important matters.