When Gulfport spouses are considering whether to file for divorce, it is common for them to be told to take their time and think if it is the right thing for them. But a major federal tax change means that people considering divorce may wish to make a decision fairly quickly. This is because of a forthcoming change in the tax implications of alimony. The change is set to take effect in 2019.
Currently, alimony payments are deductible from taxpayers' income for purposes of computing federal income taxes. Taxpayers' taxable income is reduced by however much they pay in alimony each year. This means that alimony-paying taxpayers currently pay less in taxes than they would if they earned the same amount but didn't pay alimony.
This is all set to change on January 1, 2019. If the new tax law stays in effect, any alimony payments finalized on or after that date will not be eligible for the deduction. This means that if an alimony agreement is signed on or after the first of next year, the alimony-paying spouse will not be able to deduct alimony payments from their federal income taxes. If the alimony agreement is finalized on December 31 or earlier, however, the alimony payer will still be able to deduct their alimony payments from their taxable income.
It is possible that the law will be changed before January 1, but it is by no means certain that this will happen. This means that there currently may be a big tax incentive for a Mississippi spouse to file for divorce and finalize an alimony agreement by the end of the year. Tax savings is merely one factor that should be taken into account; spouses should get a fuller idea of the pros and cons of divorce before making a decision.