There are a lot of things we have to look forward to this year: the royal wedding—and a royal baby!—the film adaptation of Madeleine L’Engle’s A Wrinkle in Time by the amazing Ava DuVernay, and the first female Doctor Who. What a time to be alive.
But there is one dark cloud on the horizon: 2018 could also see a surge couples filing for divorce, thanks to the Republican-backed tax overhaul that passed last year.
To be clear, we’re not saying that the new tax code is going to make people want to separate—move out of the country, maybe, but not separate. Rather, experts suggest that some couples who have already decided to divorce may file sooner than they might have otherwise. Why? Because in 2019, they can no longer take advantage of a 75-year-old tax deduction for alimony payments.
“Now’s not the time to wait,” one Philadelphia lawyer told Politico recently. “If you’re going to get a divorce, get it now.”
The alimony deduction—which allows paying spouses the ability to deduct the amount of spousal support from their annual federal taxes—is a powerful bargaining tool in divorces. If you’re a math person, here’s an explainer from the Associated Press: “Imagine high-earning Spouse A now pays and deducts $30,000 a year in alimony. Spouse A’s income is federally taxed at 33 percent, so the deduction saves him $9,900.”
“Lower-earning Spouse B owes taxes on the alimony at a 15-percent rate, paying $4,500 instead of the $9,900 that would be due at Spouse A’s rate. The two have saved $5,400 between them, and Spouse A got a break that makes the payments more affordable.”
In other words, more money stays in the family because of this deduction. With the change, not only will Spouse A have to pay more in taxes, but Spouse B will no longer have to pay income taxes on alimony payments. Experts estimate the repeal will bring in $6.9 billion in new tax revenue over the next decade.
While the AP’s breakdown keeps the parties gender neutral, it’s important to note that most alimony recipients are women. That’s why the National Organization for Women came out against the tax bill when it was being debated in Congress. Toni Van Pelt, the organization’s president, argued that this change would make it more difficult for women to get the support they need because their exes would have less money without the deduction.
“It’s something that’s really important to women,” Van Pelt said. “We are really concerned because it would make tough, tense negotiations between couples even worse.”
The elimination of the alimony tax deduction is par for course for Republicans, who’ve proven time and time againthey’re working against the best interests of women. But a conservative tax attorney raised another important point: With this change, the “loss to the payor [sic] will be much bigger than the gain to the payee, and this loss will be incurred at exactly the moment when the former husband and wife are most economically fragile.”
And no one wins then.
Source: The New Tax Code Might Lead to More Divorces in 2018 | Brides
