Taxes: they’ve been all over the news lately. Specifically, the Tax Cuts and Jobs Act. Regardless of how you feel about the Act, you’re probably wondering how it will affect you in the future—particularly if you are in the midst of a divorce or are considering one. The attorneys at Ruppert & Schaefer, P.C., while not tax advisors, want you to be aware of some major provisions in the Act that may affect you for the 2018 tax year and beyond:
Alimony will no longer be deductible: While Indiana law does not formally recognize the concept of alimony, alimony payments can be negotiated in certain circumstances. For alimony payments required under divorce or separation instruments executed after Dec. 31, 2018, the Act eliminates the deduction for alimony payments. This means alimony will no longer be taxable income to those who receive it or tax deductible for those who pay it. This change won’t apply to existing divorces and separations, and special rules will apply to modifications of existing divorces and separations.
Increase to the Child Tax Credit: Through 2025, the Act increases the maximum child tax credit from $1,000 to $2,000 per qualifying child, and the refundable portion of the credit increases from $1,000 to $1,400. The higher child tax credit will remain available for qualifying children under age 17.
New Credit for Non-Child Dependents: The Act has created a new $500 non-refundable credit for dependents who do not qualify for the child tax credit. Think children who are too old for the child tax credit and other non-child dependents.
Expansion of 529 College Savings Accounts: The Act expands 529 college savings accounts to allow parents to save for K-12 expenses. Now, educational expenses at all levels qualify for tax-free distributions, with certain annual limits.
More often than not, taxes come up in family-law matters. Make sure you’re aware of how some provisions of the Tax Cuts and Jobs Act could affect you. Call the attorneys at Ruppert & Schaefer, P.C., P.C., at 317-660-8150; your future is our concern.