SAN DIEGO (NEWS 8) — If you're waiting to finalize your divorce, you may want to do so before the start of the new year.
New tax laws that take effect January 1 will make the process more expensive.
Nobody gets married thinking they'll get divorced, but a shattered marriage could break your heart - and your bank starting in 2019.
Attorney Deanne Arthur says the problem is a new tax law.
“I don't think either party is going to be happy with this new change,” said Arthur.
In the past, the person paying alimony could deduct that amount from their taxes - leaving them with more money. But under the new tax law, for any divorce finalized starting January 1, alimony payments will have to be made with after-tax money. And that's not just a bad thing for the person paying, it's also bad for the spouse collecting the alimony.
“The person on the other end is going to get less money because there is less money available for the other party to be able to pay from - and the court considers that,” said Arthur.
So, who wins from this change?
The federal government, which will receive $6.9-billion in new tax revenue over the course of a decade. That's $6.9-billion less in the pockets of divorced individuals.
Arthur says couples with one spouse making a lot of money and the other staying home will be among those hit the hardest by this change, especially if their wedding was more than 10 years ago.
“Those long-term marriages where you had one spouse that's been at home with no resume, no job prospects, it would be unreasonable to say, ‘hey, get on your feet now that you divorced after 17 years,’” said Arthur.
If your marriage is on the rocks and you haven't started divorce proceedings, you're already out of luck with the tax break; California law says you have to file for divorce six months before it can be finalized.
“The new clients calling wanting this desperate divorce can't really do anything,” said Arthur. “They're a little behind the eight ball now that we're in mid-December.”