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General Discussion => General Chat => Topic started by: shakespear on March 19, 2018, 12:03:55 PM

Title: US Law Screws The Man Yet Again!
Post by: shakespear on March 19, 2018, 12:03:55 PM
Are you kidding me?  The new US tax law eliminates the tax deduction for alimony paid to an ex-spouse and makes it "tax free income" for the person receiving it.  This applies to any divorce granted on or after Jan 1, 2019.  Successful guys and gals in a troubled marriage better get to divorce court as quickly as possible and expect your spouse's attorney to stall.  In most cases, yet ANOTHER screwing the man gets in divorce court. 

Thank gawd my final payment is December 2018   :thumbsup:
Title: Re: US Law Screws The Man Yet Again!
Post by: dcguyusa on March 19, 2018, 05:19:56 PM
Remember that starting this year, personal exemptions were eliminated and replaced with a "family credit" which comes out less than the savings that made up each personal exemption amount.  Standard deduction amounts were increased, but may not cover the Schedule A amounts depending on your financial situation.  :rouble-smile: :money:
Title: Re: US Law Screws The Man Yet Again!
Post by: Maxx on March 20, 2018, 05:57:53 AM
Are you kidding me?  The new US tax law eliminates the tax deduction for alimony paid to an ex-spouse and makes it "tax free income" for the person receiving it.  This applies to any divorce granted on or after Jan 1, 2019.  Successful guys and gals in a troubled marriage better get to divorce court as quickly as possible and expect your spouse's attorney to stall.  In most cases, yet ANOTHER screwing the man gets in divorce court. 

Thank gawd my final payment is December 2018   :thumbsup:

That is maddening! It doesn't apply to me because my lifetime maintenance is coming out of my Social Security But I feel for the guys who get hit twice, first with the alimony and second with the taxes on it. I remember 25 years ago Congress was talking about tax reform. My father who was an accountant said they should just leave it alone as any "fix" would be a screwjob.
Title: Re: US Law Screws The Man Yet Again!
Post by: Lord of the Dance on March 20, 2018, 08:01:29 AM
Bummer. I don’t envy anyone going through (or having had) a divorce, especially when they’re getting hit with stuff like this.
Title: Re: US Law Screws The Man Yet Again!
Post by: andrewfi on March 20, 2018, 10:24:58 AM
Can I clarify my understanding on this?

At the moment, when one gets divorced and must pay alimony, one sets the amount of alimony against one's income taxes and thus pay no tax on the amount that is alimony?

The recipient of the alimony pays taxes on that income?

Is that how it is, until the new regulations come into effect?
Title: Re: US Law Screws The Man Yet Again!
Post by: shakespear on March 20, 2018, 01:05:32 PM
Can I clarify my understanding on this?

At the moment, when one gets divorced and must pay alimony, one sets the amount of alimony against one's income taxes and thus pay no tax on the amount that is alimony?

The recipient of the alimony pays taxes on that income?

Is that how it is, until the new regulations come into effect?

Yes.  Exactly.  It is a deduction credit against earned income.  If somebody made $100,000 per year and paid $25,000 in alimony to an ex-spouse, the alimony payer's taxable income would be $75,000 and the receiving spouse would have to pay income tax on the $25,000. 

With the new policy the government and the receiving spouse are the big winners and the alimony payer is the big loser.  The government wins because in most cases the tax rate of the alimony payer is going to be MUCH higher than the receiving ex-spouse. 
Title: Re: US Law Screws The Man Yet Again!
Post by: shakespear on March 20, 2018, 01:07:31 PM
Remember that starting this year, personal exemptions were eliminated and replaced with a "family credit" which comes out less than the savings that made up each personal exemption amount.  Standard deduction amounts were increased, but may not cover the Schedule A amounts depending on your financial situation.  :rouble-smile: :money:

It seems to me the only way this would even remotely be fair is if the person paying the alimony was allowed to use the person receiving the alimony as a deduction on the alimony payer's taxes. 
Title: Re: US Law Screws The Man Yet Again!
Post by: B.B. on March 20, 2018, 02:26:31 PM
Are you kidding me?  The new US tax law eliminates the tax deduction for alimony paid to an ex-spouse and makes it "tax free income" for the person receiving it.  This applies to any divorce granted on or after Jan 1, 2019.  Successful guys and gals in a troubled marriage better get to divorce court as quickly as possible and expect your spouse's attorney to stall.  In most cases, yet ANOTHER screwing the man gets in divorce court. 

Payers (mostly men) lose the deduction and who is the hardest hit?  Women, of course, per the National Organization for Women Gals (aka "NAG"):

Toni Van Pelt, president of the National Organization for Women, said the tax change could make it more difficult for divorcees to get the support they need because their ex-husbands would have less money without the deduction.

"It's something that's really important to women," Van Pelt said.


B/B

Title: Re: US Law Screws The Man Yet Again!
Post by: andrewfi on March 20, 2018, 02:53:32 PM
The new system, conceptually, makes more sense.

I get that tax should be paid only once on any income into the 'family' and it makes sense that the tax is paid by the person who earns the money, brings it into the family and that the recipient shouldn't pay tax on it.

I also understand the moaning from all parties who feel aggrieved. Ain't nothing perfect in this world, I guess.
Title: Re: US Law Screws The Man Yet Again!
Post by: shakespear on March 20, 2018, 03:13:42 PM
Payers (mostly men) lose the deduction and who is the hardest hit?  Women, of course, per the National Organization for Women Gals (aka "NAG"):

Toni Van Pelt, president of the National Organization for Women, said the tax change could make it more difficult for divorcees to get the support they need because their ex-husbands would have less money without the deduction.

"It's something that's really important to women," Van Pelt said.


B/B

In a perverted sense I guess true.  But they fail to mention the aspect
that the income is tax free to the spouse (mostly women).
Title: Re: US Law Screws The Man Yet Again!
Post by: shakespear on March 20, 2018, 03:20:04 PM
The new system, conceptually, makes more sense.

I get that tax should be paid only once on any income into the 'family' and it makes sense that the tax is paid by the person who earns the money, brings it into the family and that the recipient shouldn't pay tax on it.

I also understand the moaning from all parties who feel aggrieved. Ain't nothing perfect in this world, I guess.

You seem to be ignoring the fact that they are no longer a "family" anymore.  Child support is taxable to the earner because he would have to pay taxes on the money spent on the child married or not.  THAT makes sense. 

As I said up thread.  The only way this makes sense to me is if the annual amount of the spousal support is more than the new standard deduction for single people ($12,000), the payer of the spousal support should be able to claim the x-spouse as a deduction.  As it stands now, the x-spouse gets to keep her standard deduction on her income tax (to be used against any other income she earns) and gets the alimony tax free.  Hardly fair. 
Title: Re: US Law Screws The Man Yet Again!
Post by: B.B. on March 20, 2018, 06:55:49 PM
In a perverted sense I guess true.  But they fail to mention the aspect
that the income is tax free to the spouse (mostly women).

Of course they do; that's not their constituency.  NAG has every incentive to maximize the economics for women and force men to pay alimony - short for "all the money" - for as long as possible.  Ironically, the parasite is now expressing concern for the host....

B/B
Title: Re: US Law Screws The Man Yet Again!
Post by: 2tallbill on March 21, 2018, 07:04:48 AM

It seems to me the only way this would even remotely be fair is if the person paying the alimony was allowed to use the person receiving the alimony as a deduction on the alimony payer's taxes.

If you contributed to over half their support then and
they made less than $4050 per year on their own then
you probably can. The $4050 is ridiculously low.

Title: Re: US Law Screws The Man Yet Again!
Post by: andrewfi on March 21, 2018, 10:38:14 AM
Please note I used quotation marks around the word 'family' to indicate that the usage was not normal. I used it as, I hoped, a reasonable shorthand. Sorry that you were misled. The point is that the wage-earner pays the taxes in normal custom and this situation merely makes the alimony situation follow the more normal pattern.

The end result will be that divorce settlements are going to be structured slightly differently to reflect the new regime.

Here's the thing, if you lot enter into marriages like they are short-term conveniences then you are going to have multiple divorces and, until you change the divorce system, you will pay for your pleasures. Neither marriage or divorce are compulsory, they are both voluntary choices; but a poor choice of marriage is gonna make divorce more likely and that's a convenience for which you pay, yes?
Title: Re: US Law Screws The Man Yet Again!
Post by: shakespear on March 21, 2018, 12:22:44 PM
Here's the thing, if you lot enter into marriages like they are short-term conveniences then you are going to have multiple divorces and, until you change the divorce system, you will pay for your pleasures. Neither marriage or divorce are compulsory, they are both voluntary choices; but a poor choice of marriage is gonna make divorce more likely and that's a convenience for which you pay, yes?

Divorce laws vary from state to state and can vary to a certain extent within a state based on the bent of the domestic relations judge hearing the case in each county.

In my case, spousal support was set on an existing formula.  My attorney gave me a range of $500 on what he expected the judge to award based 100% on the existing income earning disparity on the trial date between myself and my now x-wife.  Predictably, the midpoint of his range was exactly what the judge awarded.  Even though we had spent $15,000 of "marital assets" putting my now x-wife through massage school and the state average earnings of a masseuse was $30,000 per year, the judge determined that my x-wife would only likely earn the state minimum wage of $8.50 per hour for $17,000 per year.  This increased my "spousal support" $1250 per month for the 4 year term - or about $60,000 total.  Nice . . . . . . . . . .   

I think you can understand my resentment concerning the tax treatment of alimony in 2019 going forward.     

My state, Ohio has a reasonably progressive attitude about the division of property in a divorce.  In Ohio all assets are acquired during the marriage are split 50-50 regardless of who earned the money to procure those assets.  Russian women should delight in the fact that "keeping a cozy home and cooking tasty meals" but earning zero taxable income during the marriage is viewed in the eyes of the law here in Ohio as an equal financial contribution in a marriage as a husband who earned $250,000 per year during the marriage.  In the words of Mr. Bumble in Oliver Twist, ". . . . the law is an ass".   

This brings us back to one of the ancient debates on this forum - prenuptial agreements.  Based on my personal experience and the current legal climate, it is my opinion that any successful man would be a total idiot to marry ANYONE  without one.   :fighting0025:     
Title: Re: US Law Screws The Man Yet Again!
Post by: yankee on March 21, 2018, 06:25:38 PM
Here's the thing, if you lot enter into marriages like they are short-term conveniences then you are going to have multiple divorces and, until you change the divorce system, you will pay for your pleasures. Neither marriage or divorce are compulsory, they are both voluntary choices; but a poor choice of marriage is gonna make divorce more likely and that's a convenience for which you pay, yes?

Divorce laws vary from state to state and can vary to a certain extent within a state based on the bent of the domestic relations judge hearing the case in each county.

In my case, spousal support was set on an existing formula.  My attorney gave me a range of $500 on what he expected the judge to award based 100% on the existing income earning disparity on the trial date between myself and my now x-wife.  Predictably, the midpoint of his range was exactly what the judge awarded.  Even though we had spent $15,000 of "marital assets" putting my now x-wife through massage school and the state average earnings of a masseuse was $30,000 per year, the judge determined that my x-wife would only likely earn the state minimum wage of $8.50 per hour for $17,000 per year.  This increased my "spousal support" $1250 per month for the 4 year term - or about $60,000 total.  Nice . . . . . . . . . .   

I think you can understand my resentment concerning the tax treatment of alimony in 2019 going forward.     

My state, Ohio has a reasonably progressive attitude about the division of property in a divorce.  In Ohio all assets are acquired during the marriage are split 50-50 regardless of who earned the money to procure those assets.  Russian women should delight in the fact that "keeping a cozy home and cooking tasty meals" but earning zero taxable income during the marriage is viewed in the eyes of the law here in Ohio as an equal financial contribution in a marriage as a husband who earned $250,000 per year during the marriage.  In the words of Mr. Bumble in Oliver Twist, ". . . . the law is an ass".   

This brings us back to one of the ancient debates on this forum - prenuptial agreements.  Based on my personal experience, it is my opinion that any successful man would be a total idiot to marry without one.         

If you are not willing to pay the price don't play the game.
Title: Re: US Law Screws The Man Yet Again!
Post by: Omega1982 on March 21, 2018, 09:01:41 PM
Very valuable information here. 

Guys that don't have a prenup can also get screwed out of half of their 401k which can be a major problem since pensions have disappeared for the younger generations. 

I had asked a while back if Russian and European men get cleaned out as much and as easily as Americans. 

Would be a good case study, especially since some jobs allow people to work remotely and in some aspects Russia has become very attractive. 
Title: Re: US Law Screws The Man Yet Again!
Post by: shakespear on March 22, 2018, 07:20:20 AM
Guys that don't have a prenup can also get screwed out of half of their 401k which can be a major problem since pensions have disappeared for the younger generations. 


True that!  In spite of the fact that I made the full $6500 IRA contribution for my wife each year for the last 10 years of our marriage with income I had earned, the judge allowed her to keep that money as "her asset" but made me divided my 401k plan base on the growth of the portfolio from the date of marriage until the date the case was filled in court. In other words, if the value was $85,000 on the marriage date and the value was $600,000 on the date the case was filed in court, she would receive $257,500.   

My attorney told me after the fact if I would have been wise enough to have a prenuptial agreement in place that included the reasonable stipulation that I was only required to make the maximum allowable IRA contribution towards my wife's retirement during each year of marriage and in doing so each would be able to keep their own 401k plans, it would have saved me a quarter of a million dollars in the divorce settlement.