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DuPage County spousal maintenance lawyer tax lawsNew tax laws that went into effect for this year have brought about quite a few changes. One major change, which could be bad news for those who are currently in the process of divorce, is that alimony (known as spousal maintenance under Illinois law) is no longer tax-deductible for those who pay it, and it will not be considered taxable income for those who receive it. This may be a major loss for people who are required to pay a large amount of alimony.

The 2018 Tax Cuts and Jobs Act (TCJA) is in effect now, and it applies to any divorce cases finalized after December 31, 2018. Therefore, going forward, any divorce that includes spousal maintenance will follow the new rules. Pre-2019 divorcees, however, may still qualify for the old rules.

Payors: Does Your Pre-2019 Agreement Meet Requirements for Tax-Deductible Alimony?

Many factors go into determining whether you can still deduct your spousal support payments from your taxes, including, but not limited to the following: 

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DuPage County divorce attorneys, divorce and taxesIf you are in the process of divorce, or are contemplating divorce, there are important tax considerations that must be taken into account. Specific parts of the tax code speak directly to divorce; thus, divorcing couples must consider the tax consequences with regard to the decisions being made.

Timing for Filing Status

Whether or not you are eligible to file jointly depends on your marital status. The IRS uses your official marital status as of December 31. Therefore, if your divorce is not finalized by the end of the year, you can file jointly. You may want to keep this in mind when you consider the timing of your divorce.

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Posted on in Divorce

Parenting Time and Taxes, DuPage County family law lawyersIf you are considering or in the process of divorce and there are kids involved, you also need to think about the tax consequences of different options regarding maintenance, child support and parenting time. To be sure, there exist some important tax considerations that may apply to divorced or divorcing parents and their children.

Filing Status

The first tax consideration to think about is your filing status. As you probably know you file your taxes during the April after the previous tax year. The key time and date to look at is December 31 at 11:59pm. If you were married at that date and time during the previous year then you need to file either “married filing jointly” or “married filing separately.” If you were divorced by then, then you can file “single” or “head of household.” You are still married until the judge issues the divorce decree. This is an important consideration and you may want to plan the date of your divorce with this in mind.

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DuPage County family law attorneys, divorce tax implicationsWhen a couple divorces and children are involved, there is a lot of discussion that goes into the tax implications of custody and support. However, the tax consequences of every aspect of divorce should be considered, especially when it comes to businesses and real estate. The division of income producing property, businesses, and real estate can have significant impacts on the final division of assets and liabilities in a divorce.

Tax Implications for Businesses 

Income producing property, such as rental property or commercial buildings, can add a whole new level of complexity to a divorce case. Depreciation of income producing property decreases the value of the property over time, yet any improvements made to the property increase the underlying basis. It is important that you have a professional evaluate the adjusted basis of the property before determining how it should be divided in a divorce.

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