The Family Law Office of James J. Kenny would like to call your attention to the way alimony deductions and the child support tax credit was affected by the new tax laws that went into effect in 2019 after President Trump signed a tax overhaul bill called the Tax Cuts & Jobs Act (TCJA). These changes will be very important to keep in mind when getting a divorce and drafting a divorce settlement and as an experienced divorce attorney, Mr. James J. Kenny and his team specializing in family law can help! Below we will discuss the changes effecting both alimony and child support and as always, we are here when you need a divorce attorney that can help you in court at either the Rancho Cucamonga Court of California or the San Bernardino Court of California.
Changes Effecting Alimony
The easiest way to describe the changes in alimony as of January 2019, is that alimony is no longer tax deductible. Before the Tax Cuts & Jobs Act bill, spouses that paid alimony were able to deduct that payment from their federal taxes and the spouse receiving the alimony would then be required to claim that additional income. These deductions have now been eliminated under the TCJA. This effects many divorces cases now in 2019 because before, many ex-spouses were willing to pay a higher alimony payment knowing that it would be tax deductible. Unfortunately now that these deductions from taxes are no longer in affect, the spouse paying the alimony will often fight to have a lower payment. Keep in mind that this only applies to divorces enacted after January 1, 2019 and all prior divorce settlements would be grandfathered-in under the old tax laws unless either of the spouses want to modify the divorce agreement. Also, if you are engaged or planning on getting married, it is important to keep these new tax changes in mind when creating your pre-nuptial and post-nuptial agreements.
Changes Effecting the Child Tax Credit
Under the TCJA, child support remains non tax-exempt and cannot be deducted and the changes affecting children and dependents and taxes went into effect in 2018. However, claiming children/dependents on your taxes changed with some benefits for whoever ends up claiming that child and this can be used in the settlement when negotiating the divorce.
As mentioned on the H&R block’s website; “Starting in 2018, the TCJA increases the maximum child tax credit from $1,000 to $2,000 per qualifying child. The refundable portion of the credit increases from $1,000 to $1,400 and the earned income threshold for claiming the refundable credit is lowered from $3,000 to $2,500. That means taxpayers who don’t owe tax can still claim a credit of up to $1,400. The higher child tax credit will be available for qualifying children under age 17, as under previous law.“
As always, The Family Law Office of James J. Kenny is happy to help with any of your divorce case, child support and alimony needs! We specialize in all family law cases and have a team here at our Rancho Cucamonga, Ca office that include Mr. James J. Kenny, a family law specialist, Mrs. Kelly Price, an associate attorney and Mrs. Vivian Jimenez-Cory, an experienced paralegal that helps with your entire divorce case no matter what needs to be done to litigate. Call today to schedule your consultation with the Family Law Office of James J. Kenny today! 909-476-2661