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Consider your taxes when deciding whether to divorce in 2018


Whether a divorce comes only after a few years of marriage or after decades of marriage, once the decision to end their relationship is made, spouses in Nevada may be eager to go through the divorce process as quickly as possible. This may be possible for couples who weren't married long, have no children and have little in the way of assets. However, wealthier couples may have more complex divorce legal issues to sort out.

While no one should hastily rush through the divorce process, couples in a high-asset divorce may want to determine whether they should divorce in 2018 or continue working on their divorce legal issues during the New Year. This is due to changes made in tax laws earlier this year that affect alimony and certain assets that may be subject to property division.

Currently, if a spouse pays alimony to his or her ex, that spouse can deduct the alimony payments from his or her taxes. And, if a spouse is receiving alimony, he or she must report those payments as income and the payments will be taxed accordingly. However, under the new law, starting in 2019 the spouse that pays alimony will be taxed on it, and the spouse receiving alimony will no longer have to count it as taxable income. Since divorces granted prior to January 1, 2019 will not be subject to the new laws, these changes in taxes and alimony should be carefully considered when determining when to finalize one's divorce.

Tax changes can also impact property division, specifically with regards to the family home and retirement accounts. If home income tax deductions are capped and annual property taxes are raised, the family home may not be worth as much over time as a retirement account would be. Therefore, some may not see these two assets as equal in terms of value when it comes to property division.

As this shows, taxes are a major issue when it comes to resolving one's divorce. Most spouses will want to pay as little in taxes as possible, but how they achieve this will depend on their specific situation. Since no two cases are alike, couples who are wondering whether they are best off finalizing their divorce before 2019 may want to seek the family law advice necessary to make this important decision.

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