If you and your spouse in California have decided that it is time for you to get a divorce, you will have to start down the road of figuring out how to separate your intertwined lives. When it comes to the financial realities of a divorce, you will likely quickly realize that the choices before you are anything but simple. There are different implications to each potential scenario, and it is important for you to take the time now to assess each of these so you make the best decision possible for your long-term financial stability.
As explained by CNBC, the new tax law turned alimony taxation on its head. The long-coveted tax deduction for the spouse who had to make spousal support payments has gone away. This was often the one benefit that made it tolerable for a person to agree to making these payments. Now, if you are ordered to pay alimony, you will also pay taxes on that money. If you are a potential alimony recipient, you may get less than before given the pre-payment taxation that occurs. These realities necessitate that you review your broader options carefully.
You may opt to fold more into your property division agreement in lieu of alimony. You may choose a one-time upfront spousal support payment instead of ongoing monthly payments. The new child tax credit amount may also be something you factor in.
If you would like to learn more about how you might approach your divorce and the decisions you need to make regarding ongoing support, property division and more, please feel free to visit the taxes and alimony page of our California family law and divorce website.