Florida residents who intend to divorce must often weigh significant emotional and financial factors. Soon, some of the financial matters that they felt confident about may be changing. In fact, in 2019, certain tax implications relating to alimony and prenuptial agreements could introduce uncertainty into the divorce process.
In 2019, alimony payments will no longer be tax deductible for the payor spouse. Instead, any money that they pay will be included in their taxable income and they must pay taxes on it as if it were still part of their financial holdings. The payee spouse will not have to pay taxes on the money they receive.
This change in the tax law may impact individuals who created prenuptial agreements but who divorce after the turn of the year. It is not uncommon for prenups to include computations that explain how one party will compensate the other in the event of divorce; without the benefit of a tax deduction, spouses may face uncertainty when they attempt to enforce their pre-2019 agreements.
Other financial matters, such as the valuation of shared businesses and the investments individuals made with their marital partners, may be impacted by changes to the tax law. It is important that readers seek their own legal and financial advice on these matters to get the best case-specific information possible. However, readers should be aware that changes in the tax law may have a big impact on the way their post-divorce financial lives will play out if they choose to end their marriages next year.