Going through a Divorce. Tax time is just around the corner. The recent changes in tax laws affect you in a big way. Here’s what you need to know now!
1. The TCJA of 2017 repealed the Alimony Deduction effective January 1, 2019. You won’t be able to deduct your Alimony or Maintenance Payments if a Court ordered you to pay after January 1, 2019. If you are receiving Alimony or Maintenance, you won’t have to claim those payments as extra income if the Court Order was entered after January 1, 2019.
2. If you need a change to an Order making you pay Maintenance or an increase in what you are receiving, for example, whatever the new amount ends up being that can still be deducted or claimed as income as long as the original Order was entered before January 1, 2019.
3. Itemized Deductions are mostly eliminated but who gets to claim the Kids as Dependants on their tax returns is still important for determining who gets to claim Head of Household and the Child Tax Credit.
4. But remember you can’t claim a “Dependency Exemption” for your kids on your Federal Income Taxes under the new Law.
3. What you can do now is claim the Child Tax Credit. Between the years 2018 and 2025, you will be able to claim $2000.00 for each of your kids who can be claimed as a Dependent and is 16 years of age or younger.
4. If you have child care expenses and your child is 12 years of age or younger, you can deduct 20% to 35% of your “employment related expenses”.
5. If you are able to sock money away for your kids for college in a “529” Account, you can get up to $10,000.00 deduction per child.
The new Tax Law is complicated but it has a great effect on divorcing couples. We at Gabrielle Davis, PC in Oak Park, Illinois are not Accountants but we can try to help you get a Divorce Agreement that helps you at tax time.