As Americans, the vast majority of us almost never think about taxes. Once a year we have to do our returns, but other than that, most of us don’t stay up at night thinking about the United States tax code.
However, if you are in a the middle of ongoing divorce proceedings or if you are considering a divorce, it might be worth a few moments of your time to consider the tax laws of this country – especially as they may be changing in the near future in a way that could significantly impact your future.
A recent article from Investment News examines the new Republican tax plan. This recently unveiled plan brings numerous changes, some of which have a particularly strong impact on divorcing couples.
Although this legislation is a long way from being codified, and numerous changes could be introduced before it becomes law, it’s current iteration will likely:
- Eliminate deduction for alimony: Currently there is a deduction for the paying spouse paying alimony payments. Without that deduction – or with much les of a deduction, the playing field changes for divorcing couples negotiation alimony and other financial aspects of their divorces.
- Eliminate many mortgage payment interest deductions: The current plan seeks to eliminate many of the types of deductions people get for their mortgage interest payments. This could have numerous effects, including a downward push on home values, an increase in push for secondary homes and vacation residences (since apparently the deductions still apply to these properties) and a negative impact on reverse mortgages.
- Negatively impact reverse mortgages: The new GOP plan also reduces the eligible mortgage indebtedness. This will impact older couples seeking divorce, as reverse mortgages are a common way for older couples to obtain the cash needed to resettle after a divorce.
One of the primary reasons people should work with an experienced, knowledgeable attorney in divorce is for help in these very matters. While most people in divorce won’t be aware of the changing legal landscape that can significantly alter the outcome of alimony, property division and other disputed divorce matters, a good attorney should be up to date on these matters.
It is important to do whatever you can to be up to speed on the changing laws. Whether you are going through mediation or you are fighting it out in the courtroom, knowledge is the most significant weapon you have to protect yourself and your financial future.