The new federal tax reform has passed, and those paying or receiving alimony need to pay attention. In the final version of the plan, the way that alimony is handled come tax time has changed. Divorce lawyers are pointing out that the process of ending a marriage may be more complicated than before, particularly for those with lower incomes.
In previous years, those paying alimony were not taxed and rather claimed it as a deduction. The person receiving alimony was forced to treat the payments as income, paying tax on the payments when April came around. Under the new tax laws, anyone who is divorced after December 31, 2018 will be treated differently. Those already settled into alimony will not be affected.
Starting in 2019, any person who pays alimony will no longer be able to claim those payments as a deduction on their taxes. The person who receives the payments will no longer have to include it as income. While some divorce attorneys oppose these changes, others don’t see them as having a dramatic effect on divorces.
Not only do those anticipating a divorce need to be more careful with their planning, but anyone entering into a marriage with a prenuptial agreement should word those drafts carefully. The way alimony looks for these couples in the future, should a divorce occur, will look different than it does now.
For assistance with your Orlando divorce or alimony, reach out to our team. We will review the details of your case along with your needs and advise you how we can best assist you.