Tax Bill will have huge implications for Alimony

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First, if you are already divorced or separated and receiving alimony, Trump’s tax plan does not apply to you. Only individuals divorced or separated after 2017 who receive alimony would be entitled to exclude the alimony they receive from taxable income.

The tax plan does, however, permit individuals who modify the terms of their divorce of separation agreements following 2017 to exclude the money from their taxable income.

But most seasoned Family law attorneys are of the position that eliminating a tax deduction for high-income earners who make alimony payments would have unintended consequences on the low-income earning ex-spouses who receive alimony.

This is because the tax deduction for alimony payors creates a large incentive for high-earning spouses to pay larger alimony payments than they would under Trump’s proposed statutory scheme.

This disparity in alimony payments is not necessarily offset by simply characterizing it as excluded from the recipient’s taxable income. This typically results in the spouse depending on alimony with less cash in the end.

 

To  read more about the Tax Bill and the implications on alimony, check out this article in the New York Times.

For more information on the implications of the new tax bill on alimony, contact a New York Divorce Attorney today

 

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