New Jersey couples who are planning on divorcing soon may have incentive to finalize them before 2019 begins. This is because a change to the tax treatment of alimony will soon take effect. For divorces that are finalized on or after Jan. 1, 2019, alimony is no longer income to the recipient, nor is it a tax deduction for the person making the payment.
However, alimony is just one issue that needs to be decided in a divorce. It is also important that retirement accounts are properly split. If the account is a 401(k), for example, it will need to be divided under the terms of a qualified domestic relations order, which will specify either a fixed dollar amount or a percentage to be transferred into an IRA owned by the other party.
Another point to consider when crafting a divorce settlement is whether or not to keep a marital home. If a person chooses to sell the home, it may be best to do so before the divorce is final. This is because it may be possible to exempt up to $500,000 in capital gains prior to the end of the marriage.
Marital property such as a 401(k), a home or other joint assets may be divided when a marriage comes to an end. An attorney may help to answer any questions that a person has about what qualifies as marital property or how to divide it properly. If a couple has a prenuptial agreement, it may guide the property division process and determine if either person is entitled to alimony.