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California

Tax law prompting flood of accelerated divorces as a Dec. 31 deadline looms

gavel judge - light of justice
Beating the deadline will allow people expecting to pay support to deduct the money from their taxable income. Those who will receive spousal support also have an incentive because judges are expected to start awarding smaller payments next year given the lost deduction.
(RomoloTavani / Getty Images/iStockphoto)

Local attorneys and judges are scrambling to finalize a flood of accelerated divorces prompted by new federal tax laws that eliminate the spousal support deduction starting Jan. 1.

Beating the deadline will allow people expecting to pay support to continue to annually deduct the money from their taxable income. Those who will receive spousal support also may have an incentive, because judges are expected to start awarding smaller payments next year as the lost tax deduction shrinks what the higher earner can afford.

That mutual benefit prompted a rush of divorce filings before June 30, because a divorce can’t be finalized in California until at least six months after proceedings begin.

And now family law attorneys are scrambling to finalize those divorces by Dec. 31, which is expected to prompt a flood of paperwork at local courthouses.

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“Everybody anticipates that come December, the line for judgment day will be around the block because people want to get it done,” said Garrison “Bud” Klueck, a family law attorney. “I imagine the courts will be devoting whole groups of court clerks to handle this.”

San Diego Superior Court officials say they expect an increase in divorce cases.

“We will take actions needed to process judgments at the end of the year depending on the number coming in,” said court spokeswoman Karen Dalton. “We don’t have the funds to hire more clerks, so if we need resources, they will have to be shifted from other areas.”

Klueck said there was a sharp uptick in people filing for divorce during the first half of 2018, with many attorneys alerting clients to the impacts of the Republican tax reform bill shortly after it was approved last December. To partly counteract large tax breaks for corporations and the wealthy, the bill eliminates many longstanding deductions, including spousal support.

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The surge in divorce filings likely would have been even larger if more agreements included spousal support. Only about 20% do, because many divorcing couples have young children and judges calculate child support before ruling on spousal support. In addition, spousal support is a major factor in a divorce only if one of the parties earns significantly more than the other.

According to the Internal Revenue Service, about 600,000 taxpayers claim the spousal support deduction each year.

david.garrick@sduniontribune.com

Garrick writes for the San Diego Union-Tribune


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