Repeal of Alimony Law – 75 Years in the Making
Happy New Year. Welcome to the very first episode of The Divorce Chronicles for 2019. I’m excited for what’s to come in 2019. With the passing of President Trump’s new tax law called The Tax Cuts and Jobs Acts of 2017, there are dramatic changes in regards to alimony payments. Today, I’m going to provide clarity about what this new tax law means for you. Show Notes: [01:30] The mere mention of taxes usually puts me to sleep, but this Tax Act is anything but boring. [01:39] This new tax law repeal a law that has been in effect for 75 years. [01:59] Alimony or spousal support is is Money Paid from one former spouse to the other. This would be the payor paying to the payee. [02:28] This could be for a specified time or indefinitely. Alimony is usually paid on a monthly basis. [02:31] For the past 75 years, alimony has been tax deductible for the payor and the payee has to pay taxes on it. [02:45] This was the law up until December 31st 2018. [03:06] How TCJA has impacted alimony. [03:19] Divorce decrees executed before December 31st 2018 are not affected by the new tax laws. [03:47] There is an exception. If the agreement is modified after December 31st 2018, then TCJA will apply. [04:58] Let’s say a spouse is making $200,000 annually and pays $50,000 a year to their former spouse who is earning $40,000 a year. [05:23] The spouse will only have to pay taxes on that $150,000 they earned. [05:45] The recipient spouse will pay taxes on $90,000. [06:39] With the new law, the spouse earning $200,000 and paying $50,000 is no longer allowed to deduct that $50,000 that they are paying to the other spouse. [07:02] The recipient spouse will only have to pay taxes on their annual salary of $40,000. [07:38] I hope these examples with actual figures provides a more definitive explanation of the new tax laws. [07:47] If you execute an alimony agreement before December 31st 2018, the payer can deduct the alimony amount and the payee will pay taxes on it. [08:24] Agreements executed after December 31st 2018 are governed by the new tax laws. This means alimony paid is no longer a deduction. Spouses that receive alimony no longer have to pay taxes on it. [08:51] All of the old agreements executed before December 31st 2018 are still valid and executable. [09:03] There is an exception if the agreement is modified after that date. Do you have any topics that you would like me to cover in future shows? Let me know in the comments below. Don’t forget to subscribe to the show, and if you are enjoying what you hear please leave a review on iTunes. Links and Resources: The Tax Cuts and Jobs Acts of 2017The Often Overlooked Emotional Aspects of Divorce with guest Robin Tucker
You can find Robin Tucker here:
Show Notes:
[01:51] Robin is a coach and a therapist. She works primarily with men and women who are navigating the divorce process. She also provides parent coaching for divorced parents. She also works with couples.
[02:18] Robin is located in Northwest Washington DC. She has in-person clients and she also works remotely with clients. She also runs groups in person.
[03:30] She works with couples who are just beginning to dissolve their marriage, and she also works with parents to help negotiate the divorce process, and how they envision their connection through the difficult process.
[05:31] When people first come into Robin’s office they are usually shocked and kind of in a numb phase. The first thing she does is to take an assessment for safety.
[06:29] Then they begin processing the news of getting divorced and what that means for them.
[06:38] Most people go into automatic pilot. They show up, but they aren’t really present.
[07:40] Clients are initially in survival mode. They are really just focusing on what they can do to get through the next day.
[08:29] Sometimes clients are fixated on their ex-partner and what happened. It takes time to process this experience and move forward.
[09:42] Once Robin finds out how the client is feeling and where they are in the process, she can sit down and delve into their feelings. She encourages clients to focus on what is more important for them.
[12:12] With couples they need to express how they are feeling without being defensive or feeling like they need to fix things.
[13:05] With domestic violence Robin’s primary concern is making sure that they have a safe place to live. Do they need a restraining order? Is there something that needs to be put in place so they can function safely?
[14:28] Violence can escalate when a partner leaves a relationship, so Robin encourages victims to have a safe place where they aren’t accessible. She also assesses whether to report to the police.
[15:22] She also works with attorneys and other mental health professionals. She is there to fully support her clients. She might work with older children but not younger children.
[16:34] The first stage clients often go through is denial. The next phase is to process the pain or the experience of abandonment.
[19:39] It’s rare, but sometimes couples reconcile. It’s human nature to remember the value of that which you are about to lose.
[21:39] Difficult aspects of the process include sharing custody, having to see a spouse that you have been hurt by, having to maintain civil contact, and pressure from extended family. Holidays are also challenging.
[23:27] There is light at the end of the tunnel though. People almost invariably find happiness again.
[24:05] It’s imperative for clients to meet with someone and talk with someone when things feel hopeless. If someone is isolated and ruminating, it’s hard to imagine that things could change.
[25:06] Sometimes people overextend themselves financially during the holidays. Be mindful of over spending to compensate for your loss.
[26:46] Identify two or three really good friends who you can be completely honest with. Take advantages of free resources in groups in the area such as 12-step programs and Al-Anon. Church groups and volunteering can also be helpful.
[29:21] Part of the process is getting clients to change their story. Robin likes to use the yes and technique.
[30:25] Robin is launching Divorce Recovery 1.0 for men and women at the end of January. This group will help you get much-needed perspective that will help you move forward.
Do you have any topics that you would like me to cover in future shows? Let me know in the comments below. Don’t forget to subscribe to the show, and if you are enjoying what you hear please leave a review on iTunes.
Links and Resources:
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