Posts tagged with "Before new year"

‘Tis the season to divide property

December 27, 2018

The holiday season traditionally brings families together, but this year it’s a different story: Divorce lawyers are celebrating a Merry Christmas, as they work overtime to help sparring spouses untie the knot before the new year, when the Tax Cuts and Jobs Act of 2017 will change the way in which payments between ex-partners are assessed, according to a report by CBS Moneywatch.

In fact, U.S. divorce lawyers. say they’ve seen up to fourfold increases in their workloads, while courts are also staying open longer to accommodate the flurry of couples scrambling to make their splits official so they can benefit from allowances under previous tax rules.

In a memo obtained by CBS MoneyWatch, Florida Judge Tarlika Navarroof the Seventeenth Judicial Circuit Court recently cited the “changing tax laws” in saying she would make herself available for hearings over the Christmas holiday—including offering court extra sessions on December 27  and December 28, when the court is normally closed.

Lynne Strober, co-chair of the matrimonial and family law practice group at Mandelbaum Salsburg in Roseland, New Jersey, told CBS that she is working “crazy hours” to complete divorce settlements by year-end, noting, “Everyday I am working on getting a different case resolved,”

Under current law, the person on the hook for alimony in a divorce — typically the higher-earning spouse—can deduct those payments from his or her income, and it is the lower-earning ex who is taxed on that sum.

But, under the Tax Cuts and Jobs Act, signed into law by President Trump in December 2017, the tax burden shifts from the alimony recipient to the person writing the check. That could mean more revenue for the federal government—given that the payer is usually in a higher tax bracket.

In changing the tax law, the House Ways and Means Committee called the current treatment of alimony a “divorce subsidy,” the network news outlet said—arguing that “a divorced couple can often achieve a better tax result for payments between them than a married couple can.”

Dueling spouses have often separated and filed for divorces in January, after family holiday obligations are endured, but the looming tax deadline also gives couples incentive to finalize a split quickly.

Steven J. Mandel, a family law attorney based in New York City, told Moneywatch that he saw a big uptick in couples filing for divorce in June and July. In most cases, he said, his clients already had been planning—or at least considering—a divorce. “I’ve never heard a couple say, ‘Let’s get divorced to save some money on our taxes,’ ” he said.

Divorcing couples hoping to beat the clock are now at the mercy of the court system—which has a backlog of cases waiting to be heard. “We have been calling up the clerk and court personnel to see if there is any way we can get our clients’ cases expedited,” Mandel said.

Research contact: @MeganCerullo