For many couples in North Carolina, the holidays can be a stressful time of year, especially when they are experiencing marital challenges. It is a known fact that often people choose to try and hold their marriages together during the holidays in part to try one last time to salvage their families and in part to avoid adding the stress of a divorce to an already tough time. This year, however, the opposite may be true and people who believe their marriages are over might actually work hard to complete their divorces as fast as they can.
Bloomberg reports that this shift is due to the changes that are afoot regarding alimony payments and taxes thanks to the Tax Cuts and Jobs Act that will take full effect on January 1, 2018. Starting with the change of year, when a person is ordered to pay spousal support after a divorce, that same person will have to pay income tax on the money they hand over to their ex. This has not been the case for some 70 years.
Any divorce that can be finalized in 2018 will be subject to the current and soon to be old tax laws. Under these laws, the person who pays alimony to a former spouse deducts the payments from their income tax return. The payment of taxes on the money is actually the responsibility of the person who receives the payments.
The recipient of alimony is most commonly in a lower tax bracket than the person who pays alimony, therefore lowering the ultimate amount of money paid in taxes.