If you and your spouse are seriously considering a divorce, there may be no time like the present to file your petition and complete the process. As 2018 crawls to a close, we are getting closer and closer to the last tax season that provides certain tax benefits to divorced couples.
The Trump Administration passed the Tax Cuts and Jobs Act (TCJA) in December 2017, and the legislative changes will finally go into effect on December 31, 2018. The TCJA is making significant changes to the individual income tax, and these changes include reforms to alimony, dependent deductions, and the child tax credit. These are all tax issues that may affect your post-divorce life.
The purpose of spousal support is to provide financial aid to a lower-earning spouse who may find it difficult to live on a single income after a divorce. Before the TCJA, alimony payments were tax deductible for the paying spouse and judged as taxable income for the receiving spouse. In 2019, this standard will no longer apply to any new spousal support orders or alimony modifications. Depending on your personal circumstances, this may be one positive change included in this sweeping tax reform.
Dependent Exemption Deductions
Under the TCJA, parents can no longer claim eligible children as dependents on their tax returns; in fact, all personal and dependent deductions are effectively eliminated under the new act.
Child Tax Credit
While dependent exemption deductions are flatlining to $0, the child tax credit is doubling to $2,000. This dollar-for-dollar reduction is typically negotiated during the divorce process and is an important tax credit for custodial and noncustodial parents. As a bonus, $1,400 of this tax credit is potentially refundable. A noncustodial parent is eligible to receive this benefit so long as the custodial parent is willing to sign Tax Form 8332.
Learn More by Scheduling a Consultation
If you have any concerns about how the Tax Cuts and Jobs Act may affect your divorce, contact the Illinois divorce attorneys at Wakenight & Associates, P.C. We can help you explore your legal options and prepare for each aspect of the divorce process. With our guidance, you can face the next chapter of your life with confidence.
We have offices in Mokena, Elmhurst, Oak Park, and Joliet! Call our Illinois divorce attorneys at any of our convenient locations to schedule your consultation.