Few things dominated the news in the last months of 2017 like the overhaul of the tax code undertaken by congress. While many individuals on all sides support or object to various parts of the new tax system, all tax-paying individuals in the country must now contend with the law and the implications it has for tax returns in 2018 and beyond.
One of the most crucial changes to the tax code that may affect divorcing couples is the removal of alimony deductions. For a number of years, individuals paying alimony to a former spouse found some relief in the ability to deduct alimony expenses from their tax returns. Under the new plan, these deductions are not longer available. It remains to be seen how these changes affect the alimony process, since those who pay alimony are often already subject to higher taxes than those who receive alimony.
The new law requires individuals who pay alimony to include payments in their overall income, which may impact how couples negotiate around these issues. With the removal of this deduction, a larger portion of the income between both spouses goes directly to taxation, shrinking the pool of funds between both parties.
If you anticipate an alimony negotiation this year, or if you’re already in one that is not yet finalized, an experienced attorney who understands both state and federal laws that affect divorce can be helpful. Professional counsel ensures that you remain informed and protected as you work toward a truly fair resolution to your divorce and a fresh start on the other side.
Source: The Clermont News Leader, “Tax Plan Includes Changes For Estates And Alimony,” Adam Hendershot, Dec. 27, 2017