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Marriage and divorce in the GOP tax bill

On Behalf of | Nov 4, 2017 | Tax Law

Marriage and divorce are two of the bigger things that can happen in a person’s relationship life. They can also be big events when it comes to a person’s taxes. Getting married or divorced can have major impacts on the rules, challenges and opportunities that are present for a person when it comes to taxes. So, when either of these big events occurs in a person’s life, among the things they may want to seek legal guidance on is what the event means for them when it comes to their tax planning needs.

Now, among the changes the tax bill that House Republicans have recently proposed would make to federal tax law are changes in the rules connected to marriage and divorce.

For one, the bill could improve the tax situation of getting married. Currently, given how income brackets are set up, married couples who are filing jointly can sometimes have a higher tax burden than they would have had if the two spouses filed separately. This is sometimes referred to as the marriage penalty. The bill would adjust income brackets to eliminate this for many filers.

When it comes to divorcing individuals, on the other hand, the bill could end up increasing the taxes they face. This is because the bill would eliminate one of the tax benefits available for divorced individuals. This is the ability to deduct alimony payments they make.

One wonders what will happen with these two aspects of the tax bill and the bill as a whole during the legislative process.

What do you think of these two changes the tax bill would make? How do you think federal tax law should treat marriage and divorce?

Source: Bloomberg, “House GOP Tax Bill Benefits Love and Marriage, Penalizes Divorce,” Kim Chipman and Erik Wasson, Nov. 2, 2017