With the passage of the American Taxpayer Relief Act (ATRA) on January 1, 2013, the United States avoided the financial abyss of the much-feared "fiscal cliff."
Do You Understand How the ATRA Is Going to Affect Your divorce in 2013?
If you're seeking alimony, your spousal support is taxable (this isn't new). However, if once you become a single filer and you earn $400,000 or more annually, your tax rate will increase under ATRA from 35% to 39.6%
Whether you command a high salary or not, you will want to discuss with your lawyer the balance between spousal support and child support. Unlike spousal support, child support isn't taxable so you may negotiate a higher child support payment and lower spousal support allotments.
Another alternative for spouses entitled to alimony is to receive a lump sum payment. By accepting a one-time payment in lieu of monthly spousal support, you can avoid taxes.
If you are paying spousal support monthly, the payments are deductible. However, if you settle on a lump-sum payment, you will not receive a deduction on your taxes.
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