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Wheaton alimony lawyersMoney is often one of the leading sources of contention during a divorce, and it is about to get worse, thanks to the new tax law regarding alimony payments. Set to take effect on January 1, 2019, this new law will eliminate the tax credit that paying parties used to receive at the end of the year. Learn what this could mean for your Illinois divorce, and discover how a seasoned divorce lawyer may be able to help you mitigate the potential risks and issues that could arise. 

A Closer Look at the New Alimony Tax Law

In previous divorces, and those completed before January 1, 2019, alimony payers receive a tax credit at the end of each tax year. The receiving party is also required to report their alimony payments as income to the Internal Revenue Service (IRS). Both of these aspects of divorce will be changing at the beginning of next year. That means there will no longer be an incentive for paying alimony, and fewer parties will be willing to pay it. That can hinder the financial well-being of receiving parties, as well as the paying parties, perhaps even more so than many realize. It can also make for more contentious divorces, and that can increase the stress levels of all involved parties - especially any minor children that the couple may share. 

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Illinois alimony lawyersAlimony, though awarded less frequently today than it once was, is still a component in some divorces. Thanks to the changing tax laws under the Tax Code and Jobs Act, the rules that once applied will be changing as well. More specifically, parties who pay alimony will not be eligible for a tax deduction if their divorce is finalized after December 31, 2018. Learn more about how this new law may impact your post-divorce finances and discover some strategies for minimizing the damage in the following sections. 

Alimony Under the New Tax Law

The new tax law removes the deduction that alimony paying spouse once received. Sadly, this can keep them in a higher tax bracket, which may ultimately impact the amount of alimony that they are willing to pay. The receiving spouse, though no longer required to pay taxes on their alimony money, may receive a lower award, thanks to their spouse’s tax bracket stance. The new tax law may also hinder negotiations, making for a longer, more drawn-out divorce, which also drives up the cost of divorce. In short, the new law could have a significant impact on the finances of all involved parties, both during and long after the divorce. 

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Illinois divorce lawyersTaxes, though not often discussed, are a critical element in almost every divorce, and they are especially important when alimony may be owed. Thanks to the new Tax Code and Jobs Act, everything about alimony and taxes will change, come the start of 2019. Find out how and discover what it could mean for your Illinois divorce in the following sections. 

The New Tax Law and Divorce - An Overview

While the new tax law may not affect all divorces, it is likely to have a significant impact on cases involving alimony. Parties who pay support and complete their divorce after December 31, 2018, will no longer receive a tax deduction at the end of the year, and receiving spouses will no longer be required to pay taxes on the alimony they receive. At first glance, this might seem like a benefit for the family, but appearances can be deceiving. 

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Illinois alimony lawyersAlimony is meant to provide a disadvantaged party with the financial resources they need to recover after a divorce but it can be a burden for the paying party. In fact, many rely on the tax break they receive at the end of the year to even out the expense. Sadly, that tax could be eliminated if the GOP bill tax bill is passed by the Senate, as is. Learn more about how its passage could impact you in divorce and what an experienced attorney can do to help.

The GOP Bill and Divorce

As of right now, paying parties can claim their alimony as a tax deduction. This not only reduces the individual’s tax load at the end of the year, but it also helps to keep more money in the family unit. If eliminated, it could increase the risk of divorce-induced poverty among already at-risk families, such as those classified as low to middle income by the government.

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Illinois divorce lawyersAlthough alimony is far less common than it once was, it is still a factor in divorces today. Under what circumstances is alimony awarded, and how can you tell if you may be entitled to it in your Illinois divorce case? The following information explains, and it provides you with some details on why and how the assistance of an experienced family law attorney can help.

Alimony in an Illinois Divorce

Despite the common misconception, alimony is not awarded in divorce, simply because one asks for it. Instead, there are certain factors that the courts use to determine if a party may be eligible, including:

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