DALLAS (CBS11) – You can count on more divorces signed in 2018 according to at least one North Texas tax attorney.
“I think we are going to see a lot of divorce lawyers encouraging clients to finalize their divorces this year,” said Dean Hinderliter, a tax attorney at the law firm Thompson and Knight.
The “monumental change” according to Hinderliter is because of the new Tax Cuts and Jobs Act that went into effect on January 1. The law scraps the tax break divorcees get for paying alimony–starting for divorces finalized next year.
The spouse who pays alimony will no longer be able to take a tax deduction on the payment. Hinderliter says this is a historic change to a law that has been in place since 1942.
“In the past 77 years, the government is subsidizing some of the alimony, by giving a deduction to allow the husband typically to be able to make a higher monthly alimony,” he said. “Under the new rules, that deduction is gone.”
He said the person paying alimony could end up paying more out of pocket – adding stress to an already acrimonious process of divorce.
“We are going to see a lot of divorce court very busy towards the end of December as everyone is trying to get their divorces finalized,” he said.
It could complicate divorce negotiations if the person getting the payment decides not to sign, in order to get more payment out of the payee.
According to the Social Psychology Quarterly, the popular months to get a divorce happens to be March and August.
Hinderliter believes the change in the law will hurt the person receiving alimony.
That’s because the person paying off the alimony will not be able to write off the payment, hence the person receiving could get less of the money.
“They lose the bargaining chip,” he added. The rule goes into effect on divorces signed after January 1, 2019.