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The JGTRRA of 2003: Financial Implications for Divorce

By Jerry L. Style and Carl M. Palatnik
September 02, 2003

On May 23, 2003, the U.S. Congress approved the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) and, within a week, President Bush signed the act into law. JGTRRA reduces tax rates across the board, increases the Child Tax Credit from $600 to $1000, and eases the marriage tax penalty. It also reduces the tax on dividends and capital gains and increases write-offs on capital assets for businesses. Marriage-penalty relief directly affects married taxpayers, but what effect will the new law have on people going through divorce?

Tax Planning Issues Related to JGTRRA

Tax planning, although complex, is a virtual necessity in divorce because there are a variety of tax issues that relate to both income and assets. Proper planning can typically reduce the overall tax burden on one or both parties and enhance their respective post-divorce financial positions. In contrast, poor planning can have profoundly negative long-term effects on the parties. Although JGTRRA does not specifically address divorce taxation issues, changes incorporated into the law will have a significant impact on people going through divorce. 

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