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New Alimony Law Goes Into Effect 1/1/19

You may have heard that new changes to the tax law will be going into effect at the beginning of next year. Some of the biggest changes will impact the ways that divorced couples deduct and report alimony on their federal income taxes. Because the impact of these changes will be profound and complex, we wanted to fill you in on what you need to know about the new alimony law going into effect January 1st, 2019.

What Is the Current Alimony Tax Law?

Under the current alimony tax laws, divorces that are finalized on or before December 31, 2018, can deduct alimony from the paying spouse’s federal income taxes. The spouse who receives alimony can include the payments as part of their taxable income. This means that the paying spouse generally gets a tax break on their alimony payment. Spouses who have written agreements that decree alimony won’t be deductible for the payer are exempt from this law.

What Will Change on January 1st, 2019?

The following things will change for divorce and separation agreements finalized on or after January 1st, 2019:

  • Alimony can no longer be deducted for the paying spouse
  • The spouse who receives alimony does not have to claim it as part of their taxable income

Because one spouse will lose a tax break, the new law has major implications for divorces that are not wrapped up by the end of the year. The spouse who ends up paying alimony can face a high tax rate if the divorce isn’t completed by December 31st, 2018. For the spouse who receives alimony, they will actually get tax relief on the alimony they receive if they put off their divorce until after January 1st, 2019.

Consult with a Divorce Lawyer Today

With these new changes going into effect very soon, it is a good idea to consult with an experienced family law attorney to find out how your divorce agreement will be impacted. There are a number of complexities that should be addressed with a skilled legal advocate to ensure that your interests are fully protected.

Call (727) 205-0770 to request your consultationwith a Clearwater family law attorney.