Alimony Under The New Tax Laws

Alimony Under The New Tax Laws has changed as to who can deduct it as an expense.  As you probably know, Congress passed a tax bill in December of 2017.  There are still changes in the bill that people do not understand in regard to the laws.  Most notably for attorneys so far are the changes in tax-ability of alimony under the new tax laws.  In fact, the Tax Cut and Jobs Act of 2017 actually eliminates the alimony tax deduction for anyone paying alimony.

Changes under the New Laws

With the recent changes in place, the alimony tax treatment is vastly different.  For example, the ex-spouse receiving the alimony no longer has to pay taxes on the amount he or she receives.  It is no longer taxable income for the recipient.  Conversely, the ex-spouse who is paying the alimony no longer can deduct the alimony payment from their tax filings.  This is likely to lead to people fighting harder over alimony payments and possibly lead to several motions to modify alimony in the near future.

The effect this has on mediation and divorce settlements is powerful.  Courts are likely going to see a spike in divorce cases that go to court.  Cases that generally end in mediation are more apt to become a court battle over alimony payments and last longer.  One other and less obvious effect may be an increase in spousal abuse and adultery.  More impoverished couples who cannot afford a divorce may simply settle with staying together.

QUESTIONS ON STATE TAXES?  SEE OUR ARTICLE FOR MORE INFORMATION.

Payments and Alimony Modification

Alimony modification is a possibility for those who face harm with the loss of the tax deduction.  But, there are a few legal loopholes you must know about before filing a successful modification.  Most significantly is the fact you can only file for an alimony modification in the state your alimony is originally decided in.  Next, the alimony changes definitely apply to those settlements that occur starting January 1^st, 2019.  However, it is not clear if they will apply to those settlements before 2019.  As a result, your case may still remain unaffected.  We strongly suggest you contact an attorney if you have questions about alimony modification or payments.  Our attorneys offer a free phone consultation.

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