Anonymous on Facebook
3 years ago
11/16/2018, 06:36 AM
TTHE CLOCK IS TICKING TO FINALIZE YOUR DIVORCE BEFORE JAN. 1, 2019
The Tax Cuts and Jobs Act of 2017 (the “Act”) that went into effect on January 1, 2018, made important changes to existing tax laws. In the family law area, the Act eliminated the ability to deduct alimony payments made pursuant to divorces that are finalized after December 31, 2018. Under current tax law, alimony is tax deductible by the payor and taxable to the payee. This means that if you are the person paying alimony, then you get a deduction for the amount you paid. However, for divorces finalized on or after January 1, 2019, all alimony payments will be tax-neutral (non-deductible by the payor and no longer income to the recipient). The new tax law only impacts alimony payments that are required under divorce or separation instruments that are: (1) executed after December 31, 2018 or (2) modified after that date if the modification specifically states that the TCJA tax treatment of alimony payments (not deductible by the payer and not taxable income for the recipient) now applies. The reclassification of alimony payments is expected to make settlements more difficult as the higher-earning spouse will have more income taxes to pay and fewer funds with which to settle the case.