Be Aware: TCJA What It Is and How It Can Affect You from the experts at Lakeshore Law

TCJA: What It Is and How It Can Affect You

My #1 Advice – Meet with your CPA!

A big change to the TCJA has to do with spousal support for agreements entered after January 1, 2019. Alimony will no longer be taxable to the person receiving alimony or deductible to the person paying alimony. Under the old tax code, spousal support (alimony) was considered to be income to the spouse receiving it and a deduction for the spouse paying it.

The new tax code could affect modifications of spousal support orders entered by courts before January 1, 2019. The language in pre Jan. 1, 2019 orders of spousal support should indicate that the pre TCJA Be Aware: TCJA What It Is and How It Can Affect You from the experts at Lakeshore Lawtax code treatment should remain effective in any modification order after January 1, 2019. IRC 71(b)(2) applies to divorce or separate maintenance judgments entered as of January 1, 2019, or modified as of that date if the modification expressly states that the new tax code applies.

The Changes Don’t End at Spousal Support

Another change in the tax code is the minor child tax exemption. The new tax code has removed the exemption provision. The child tax credit is important. The child tax credit has been increased to $2,000 per child. The IRS has phase out income limits that may reduce these credits. The phaseout starts at 200K as a single and 400K as married. $1,400 of the $2,000 credit is refundable settlement negotiations.

Businesses will be affected by the new tax code also. All entertainment expenses are non-deductible regardless of the business purpose.

Regardless of your situation, being AWARE and consulting with your CPA as well as your divorce attorney is important as the new tax code rolls out. Lakeshore Law and Mediation can help answer your divorce tax questions and more. Contact us today, Lakeshore Law and Mediation is ready to help you!