Detail


Changes in the New Tax Bill that May Affect your Divorce




2018/04/30

      
      Currently, alimony payments that paid are tax deductible to the payor and taxable to the payee.  Which means that if the payor pays $1,000.00 per month, then the payor will have a reduction to annual income of $12,000.00 and the payee will have to claim $12,000.00 as income.  Under the new tax law, for divorces finalized in 2019 and after, the payor will no longer receive a deduction for the payment of alimony and the alimony will not be treated as income to the payee.  

      The shifting of the income from the payor to the payee generally requires the parties pay lower taxes.  Generally the payee is in a lower tax bracket and pays less in taxes.  By shifting the tax burden back to the payor under the new law, the government will receive more in taxes.  

      The window is still open and any divorces that are finalized in 2018 will still fall under the current law.  Beginning 2019, the strategy will change when negotiating and litigating the alimony amount.   This is only a short synopsis of the change, and is not a substitute for professional advise when it comes to your divorce case.  The advise of an attorney fully aware of the facts your case as well as a tax professional will be essential.

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