How the New Tax Laws Impact Alimony
As you may know, President Trump signed the Tax Cuts and Jobs Act of 2017 into law recently. What you may not know is that these new tax laws substantially impact many taxes in the average person’s life, including how they handle alimony.
Alimony Deduction Goes Away in 2019
The fundamental change to alimony involves how it is treated under federal tax law. In the past, recipients of alimony had to declare alimony as income and the payor was able to take a tax deduction. Under the new tax law, the recipient does not declare alimony as income, and the payor can no longer take a deduction.
Already Divorced? You Aren’t Impacted
If you are already divorced or already have a separation agreement, you do not need to worry about the alimony tax change. Your current agreement will stay in place and you can still take a deduction if you pay and must declare alimony as income if you are a recipient.
Divorcing Soon? The Deadline is December 31, 2018
If you are planning on divorcing you may want to begin the process sooner rather than later if you are concerned about how the change in alimony and tax law will impact you. This new rule only applies to those who complete their divorce or file separation agreements after the deadline of December 31, 2018.