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February 2019 Archives

What effects are new tax laws having on divorcing couples?

If you and your spouse agreed to a divorce settlement in New Jersey before Dec. 31, 2018, the old rules regarding alimony, in which the recipient pays taxes on alimony, and the payer deducts it from his or her taxes, still apply to you. However, if you did not reach a settlement until after the first of the year, the provisions in the Tax Cuts and Jobs Act of 2017 now apply to your spousal maintenance arrangements. That means that if you are to pay alimony to your ex-spouse, you cannot deduct the payments, but if you are the recipient, you do not have to pay taxes on it. 

Dividing up a 401k

Most in Essex County will go into divorce proceedings anticipating that they will have to relinquish complete ownership of certain assets. One particular asset whose inclusion in property division proceedings often takes people by surprise is a 401k. A 401k is viewed by most as being an individual retirement account; why, then, would it be considered marital property? One must remember that the funds contributed to a 401k are taken from their salary. As salary earned while married is viewed as marital property, so too are the contributions made to a 401k in that time. 

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