Many North Dakota residents have likely heard that the new federal tax law has some changes that will impact many people in the coming years, particularly those who are divorcing. The big change: for divorces that occur after January 1, 2019, alimony payments will no longer be deductible by the payor and will no longer be taxed as income for federal tax purposes by the payee.
This means that divorcing couples now have less than six months to conclude the process and get alimony payments locked in to avoid this major shift in tax consequences. For some couples, that means that it will be time to get creative about how to address alimony issues in the divorce process.
A recent article suggested one tip in particular that may be useful for anyone who is in the midst of a divorce: press those negotiations to get the divorce finalized this year. Not all couples who are going through a divorce have an open line of communication – after all, their relationship has gotten to the point where they are ending their marriage. However, both sides may be able to appreciate how the impending change in the tax law can affect the alimony issue in a divorce.
There are other creative solutions to the alimony issue as well, including potential third-party mediators and asset trades in lieu of alimony. For any North Dakota resident who is going through a divorce, it is better to address this potential conflict and the creative alternatives sooner rather than later.