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Divorce expected to become more contentious with tax changes

The ending of a marriage is seldom an easy undertaking -- emotionally, mentally or financially. It is now expected that the new tax laws will make certain aspects of a divorce even more contentious for many Colorado spouses. While the changes will not be implemented until 2019, the latter half of 2018 is expected to keep family law attorneys quite busy.

In years past, alimony was added to a divorce agreement in order to help level the playing field for a spouse who may have sacrificed his or her career in order to help raise children. As a result, when a marriage ended, the stay-at-home spouse would often be at a disadvantage in the job market as he or she did not have updated career skills. Alimony was meant to help bridge the gap until the lower earning spouse could become more self-sufficient.

The tax laws were structured in such a way that the paying spouse could deduct alimony payments from his or her taxable income. This often worked as an incentive for that spouse to be willing to pay more since it could be considered a tax advantage. The receiving spouse was required to count these payments as income, but since his or her income typically kept him or her in a lower tax bracket, the taxes were not usually a burden.

The new law no longer allows for spouses to take this deduction. The receiving party will no longer report these payments as income, but the expectations for lower alimony settlements will not benefit the receiving spouse. Colorado residents who are in the beginning phases of seeking their own divorce may benefit from seeking the guidance of an experienced attorney who can provide information concerning the best settlement options in each unique situation.

Source: newschief.com, "Tax overhaul seen spurring more acrimonious divorce negotiations", Ben Steverman, Feb. 15, 2018

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