Child Tax Deductions in the New Year
The divorce world is swirling with activity right about now. Child tax deductions and other issues coming to fruition in the new year are creating quite a ruckus. My job as a neutral divorce mediator means I need to constantly keep my clients abreast of all the changes coming soon that may affect the decisions they make today. Typically, divorce is something you want to take time to evaluate, plan the best scenarios and have a team of supporters around you. However, the changing tax code, effective January 1, 2019, is forcing some couples to speed up the process and make important decisions at an accelerated pace.
The big news regarding child tax deductions in 2019 is that children are no longer tax-deductible. Through the year 2025, the new tax code completely eliminates the $4050 tax deduction for each dependent. However, the child tax credit which offsets taxes owed is increasing from $1000 per dependent to $2000 per dependent. Good for me! With four kids, I’m looking forward to that $8000 tax credit. Additionally, the standard deduction will almost double starting in 2019.
These changes to the child tax deductions in the new year are important for purposes of mediation and negotiation. We have to remember that we will no longer be able to use the child tax deduction when working on incentives in a mediation. However, the child tax credit is very much at play. The parties may choose to have one parent claim the tax credit exclusively in exchange for giving something up or alternatively the parties may wish to alternate the credit every year.
With regard to the child tax deductions in the new year, the great thing about Divorce Harmony is that we offer virtual divorce mediation. With this process, we can do everything online and skip the long lines and crowded court calendars that are backed up because of these upcoming changes to the tax code. If we start fairly soon, your divorce can be finalized before the changes take place on January 1, 2019. You would be grandfathered into the rules of 2018. After mediation, we can e-file all the paperwork and a final notice of divorce will be mailed to you! How easy is that?
In addition to the changes in child tax deductions in the new year, major changes are taking place with regards to alimony and pre and post-nuptial agreements. The result of this will be some confusion and intense negotiating. At divorceharmony.com we are equipped to answer all of your questions and make the divorce process as smooth as possible whether you want a divorce now or want to wait for the new year. Please contact divorceharmony.com with any questions.