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Pennsylvania divorces to see big changes

On Behalf of | Nov 25, 2018 | Alimony

The holiday season is often a time when couples in Pennsylvania experiencing marital challenges work extra hard to hold their families together. Some people use this season to correct their paths and try to save their marriages altogether. Other people may agree that they will get divorced but choose to hold off initiating that process until the holidays are over. This year, however, may be very different as couples might have an unusual incentive to complete their divorces before the New Year is ushered in.

As Bloomberg explains, any divorce settlement that might include provisions for one person paying alimony to the other may be best finalized in 2018. Starting in January, the new tax law that was passed earlier this year will go into full effect and will change the way alimony is taxed.

Instead of the responsibility to pay income tax on spousal support resting with the person who is the recipient of the funds, the responsibility will now be placed on the person who is the payor of those funds. This means one spouse could have to pay federal income tax on money that they simply hand over to their former spouse. At the same time, they will lose the ability to deduct the money from their tax return as they would be allowed to do under the current tax law.

Many people believe that this tax code change may well lead to very different outcomes in divorce settlements. Some couples may choose to avoid alimony altogether and instead negotiate on other points.


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