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Tax changes that may provide push to settle divorce this year

The idea of ending a marital relationship is seldom an easy one to accept. There are many reasons why a couple may choose a divorce as their best option when the marriage is no longer workable. However, the upcoming changes in the tax code may provide the impetus needed for some South Carolina residents to seek a decree before the end of the new year.

When Congress passed the tax reform bill last year, the news was received with mixed feelings. Though many of the changes may provide benefits, there may be consequences that negatively impact couples who are seeking a divorce. One of these changes will affect those who are expecting to make or receive alimony payments. Currently, those who are ordered to make these payments may take a portion of them as tax deductions, while those who receive them are required to report them as taxable income. This will change in 2019.

It is feared that removing the tax deduction for paying spouses will result in overall lower alimony, which may harm those who need it the most. In addition to this change, the tax revisions also impact the amounts that are deductible for property taxes and the personal gains tax when a home is sold, which may influence the decision to sell a family home. Furthermore, until 2026, the personal exemption multiplier for minor children has been suspended, though this may be offset by additional credits. 

Lastly, if a couple has an existing marital agreement, it may need to be revised in order to retain the provisions that were originally intended. The decision to seek a divorce is seldom based on tax purposes; however, if a dissolution has already been decided upon, then the coming changes may provide a reason to pursue a settlement sooner rather than later. South Carolina residents who are unsure how the tax changes will impact their divorce may seek the advice of an experienced attorney.

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