When the clock strikes midnight on Jan. 1, it will be out with the old and in with the new.
And this year, one thing that is included with that is alimony tax rules, which have been in place for more than 70 years.
Current rules stipulate that alimony payments are tax-deductible for the payor and taxable income for the payee. But starting in 2019, that will no longer be the case.
But getting your divorce in under the Dec. 31 deadline is complicated.
That is because an alimony agreement has to be in a final settlement or court order, according to the American Academy of Matrimonial Lawyers. Temporary agreements will not hold up.
For professionals working in this field, that makes for an especially busy time trying to get divorces through in time.
“For any matrimonial attorney or any person in the financial field working in the area of divorce, from now until the end of the year is probably going to be the most stressful, busy time in their career,” said Stacy Francis, certified financial planner and president and CEO of Francis Financial.
If you started your divorce proceedings toward the end of the year, you may have already been too late.
“For someone to have filed for divorce in November, they’re not going to get a judgment this year,” said Anne Cochran Freeman, partner at Sideman & Bancroft. “There are no rabbits to be pulled out of hats.”
But new tax rules for alimony do not have to be bad news for your divorce.
“[It’s] not the end of the world,” said Megan Gorman, managing partner at Chequers Financial Management. “What it does is give us opportunities to do planning on other areas of your finances if you’re getting divorced.”