Service of Deadlines: Divorce American Style

July 19th, 2018

Categories: Alimony, Deadlines, Divorce, Financial Planners, Middle Class, Taxes, Wealthy

Photo: thepitcher.org

Most people must meet deadlines at work and/or at home. There are plenty associated with product introductions that, in turn, trigger marketing and media rollouts and, of course, news deadlines. Some whisk out restaurant and school meals at lunch in record time. Others note coupon redemption days; plan and attend weddings; catch trains or planes and return library books for starters.

Here’s a deadline from left field: For tax reasons you’d better hurry up and finalize your divorce according to Jim Tankersley in his New York Times article, “Wedded Bliss Lost Its Ring? Rich Should End It in ’18.” You have 5½ months before the Republican tax law kicks in.

Photo: illinoislegalaid.org

If you split after December 31, you will no longer be able to take the full amount of alimony off your Federal income taxes. This is a very big deal especially for the wealthy and think–the benefit could last for decades. In fact, from 2019 on, alimony-payers won’t be taking off a cent.

By removing the tax break Federal revenues should benefit by $7 billion over ten years.

IRS records show that 600,000 get that deduction each year, reported Tankersley. He wrote that “about 20 percent of taxpayers who currently claim the deductions are in the top 5 percent of household income earners.”

Photo: nstp.org

There are other repercussions in addition to the obvious one. The higher earning ex spouse, once the deductibility is gone, might agree to pay less alimony to compensate for the loss of the tax benefit. This will impact women and some children. “Child support payments are not deductible, but so-called unallocated support—payments that are meant to help a divorcing spouse and children at the same time—is deductible.”

Some experts predict that the new tax law might reduce the number of divorces that women initiate if it adversely impacts their alimony/income.

Photo: 80snostalgia.com

But take heart: Financial planners for the wealthiest “will have ways of working around the change.” Some spouses “may choose to forgo alimony payments and instead accept more lucrative real estate, larger shares in tax-deferred retirement accounts or some complex combination of the two that maximizes tax advantages.”

What about everyone else? Surprise surprise: “Middle-class and lower-income taxpayers have fewer of those assets—and less ability to recapture potentially lost benefits of the alimony deduction,” Tankersley wrote.

What deadlines do you find hardest to meet? Do you wait until the last minute? Have you benefited from the new tax law? Do you think that lawmakers take into consideration the repercussions that the changes they make have on citizens’ lives? The pundits couldn’t forecast whether there will be a flurry of divorces before year’s end. Do you think that there might be?

Photo: defymca.org

 

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8 Responses to “Service of Deadlines: Divorce American Style”

  1. Hank Goldman Said:

    Thanks for sharing! Sucks!
    Glad I have no one to pay alimony too. I hope that’s not a double negative Ha ha ha Ha.

  2. Jeanne Byington Said:

    Hank,

    I, too am glad that you don’t have to pay alimony as is your family and especially your wife!

    If someone is paying alimony now, they are covered. It’s those who get divorced after December 31 who are in trouble.

  3. Protius Said:

    I admit to seeing my taxes rise dramatically because of Trump’s new tax laws, but I blame that as much on my lack of foreseeing the possibility that these so called “populist,” scarily authoritarian, fundamentalist conservatives might gain power.

    These are now clearly trying to push ever greater amounts of wealth into the hands of the very wealthy at the expense of everyone else with this new law, but what is also behind this particular section of it is an effort to discourage the not so rich from divorcing, and by inference, from marrying.

    Remember, if you are a rich fundamentalist “Christian,” you can “sin” all you want and as long as you repent your sins, you are forgiven. The rich divorcing tax payer gets lots of breaks under the new law which will offset the cost of losing alimony deductibility, as a practical matter, the same forgiveness. However, the not so rich do not get these. Therefore, if prudent, they will wait until they are very rich before marrying.

  4. Martin Johnson Said:

    Martin wrote on Facebook: Most live by a distortion of the adage: Put off today, what you can do tomorrow. Other than generals or chess masters, few think long term or strategically. Some corporations project only from quarter to quarter. Is it human nature? Another aphorism: If you fail to plan, you plan to fail.

  5. Jeanne Byington Said:

    Protius,

    I doubt that most people go into marriage thinking of divorce unless coerced by family or intimidated by a partner. I’d like to hope that apart from those who marry for money or power and realize it wasn’t a good move, most have best intentions.

    I feel sorry for those caught in an untenable situation due to cruelty, if they are not wealthy. Lately, the middle class seems increasingly to be holding the bag. We sure need a change in Washington with people whose eye is on helping the majority of citizens, not the fortunate few at the top of the heap.

  6. Jeanne Byington Said:

    Martin,

    I am deadline driven and like to get things done long before they are due, if possible. My motto is prioritize and give myself time should other deadlines get in the way.

    On occasion smarter minds than mine have urged me to wait before jumping into action, and for good reason as it often turns out.

    I know some who work best under pressure which is why they create it by procrastinating. I can whip things out if necessary but if given more time the results are better. I knew an editor who thought she’d get better results if she gave a PR person less than a day to respond. If what she wanted involved client approval, my bet is she often got nothing as not all clients are available 24/7.

    Remember the days we wrote about or made proposals around five and ten year plans? Like the rotary telephone most, today would wonder what they are.

  7. Martin Johnson Said:

    Martin wrote on Facebook: Five and ten year plans were so subject to revision that they were inoperable. I do think that some of the major tech companies, like Amazon, Google and Netflix do have workable projections, flexible enough, but disciplined. These minds sprang from the matrix of indolence to become institutions.

  8. Jeanne Byington Said:

    Martin,

    These companies you cite have far more data than companies in the day. Sure some did marketing studies but today, they practically know what time potential customers brush their teeth.

    Nevertheless, I wonder if some corporations plan beyond the chairman’s or chairwoman’s next bonus.

    Any kind of plan helps marketers and their support teams develop plans of action. We’re always prepared to change course but at least we know where to begin.

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