Raleigh Divorce Law Firm
Get help resolving family law issues now. Call for a consultation:

PLEASE NOTE: Our office is open for business as usual but in these unprecedented times, the team at Raleigh Divorce Law Firm is taking proactive steps to protect our team, clients and colleagues as well as do our part to help slow the spread of COVID-19. We have taken measures to limit the number of people physically in the office and have been working with clients to handle meetings by phone and utilize other technological methods to communicate when necessary. Our office location does not share space with any other businesses so there is a limited amount of traffic in and out of the office. We sanitize our conference rooms after each use so they are clean and ready for the next client.

There are currently courthouse policies state-wide that involve the postponing of trial dates within the next thirty days and we are working diligently to make sure our existing clients are notified about this and to reschedule any affected court dates. We continue to remain committed to providing quality legal services. Our phone and computer systems have the ability to operate remotely, should that become necessary at any point in the future. Additionally, we utilize a secure network and have an IT team dedicated to protecting our client’s privacy and security while allowing our attorneys, paralegals, and staff the opportunity to work from home if needed.

If you are a current client of the firm or a prospective client, please be assured that we continue to have the ability to effectively represent you. Please feel free to call or email us anytime, and we will continue to be available to serve your needs.

The impact of the tax reform proposal on divorce

Tax reform is often a hot topic in the media. Media hosts and guests debate on how these proposals will impact the population. Who will pay less, who will pay more? One debate currently circulating throughout news stories involves the potential for the current proposal to impact those who are going through a divorce. 

What are the tax implications of divorce?

Many tax issues can arise during divorce. Many of these tax consequences affect the property division portion of the proceeding, and need to be carefully addressed in any agreements or court orders. However, two additional areas that couples often need to address during divorce involve the payment and receipt of child support and spousal support, also referred to as alimony.

How do taxes apply to child support and alimony under current law? 

Child support is not taxed or considered taxable income to the parent who receives it. This is based on the belief that parents are required to provide financial support for their children.

In contrast, spousal support payments are treated as taxable income to the spouse receiving these payments under current tax laws, and the spouse paying spousal support gets to take the payments as a tax deduction. Since the paying spouse benefits from the deduction, parties often take this into account when negotiating the amount of spousal support. Additionally, since a spouse receiving support is taxed on the amount, the tax consequences also have to be taken into account in determining the actual net support that spouse will receive and what amount should be set aside to cover estimated tax consequences. 

How would the tax reform proposal change this? 

It does not appear that the proposal would impact the current law regarding child support. It would, however, impact the application of tax obligations to spousal support payments.

The proposal essentially removes the tax impact on these payments. Those who make alimony payments would no longer be able to deduct the spousal support payments, thus lowering their overall tax obligations. Those who receive these payments would no longer have to include the amount as a source of income, thus removing their tax obligations as a result of the spousal support payment.

What does this mean for those going through a divorce?

This proposal provides an example of the importance of being aware of tax laws and tax implications related to the divorce process. It is important for those who are in the process of a divorce to know how these laws will impact their divorce settlement agreement and for the agreement to address and take into account tax consequences.

As such, it is a reminder for those who are going through a divorce to seek legal counsel to help better ensure their interests are protected during the divorce proceeding.

No Comments

Leave a comment
Comment Information

Schedule A Consult

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Email Us For A Response

8341 Bandford Way, Suite 1
Raleigh, NC 27615

Phone: 919-256-3970
Fax: 919-256-3971
Raleigh Law Office Map