Time is of the essence: A New Year, a new alimony problem

Exploring the new provisions of the Tax Code regarding the coming nondeductibility of alimony 

In all the news about tax cuts in the recent federal tax reform bill, most people have not heard about an earthshattering change in the family-law world poised to take effect on January 1, 2019. For divorces finalized after December 31, 2018, ex-spouses who pay alimony to support their formerly better halves will no longer be able to take alimony paid as a deduction against income on their federal tax returns.

 

In addition, alimony recipients will no longer have to pay taxes on those funds. 

Future impact 

Many speculate that this change will have a negative impact on future divorce negotiations because higher-earning spouses will not be as inclined to agree to generous alimony provisions. After all, without the break on their tax returns of alimony deductions, their taxable income will be higher, which may even be push them into higher tax brackets. 

When alimony ends up in court, the trial may end up being more expensive because potential payors have more incentive to vigorously contest the issue. 

Alimony has been deductible for 75 years and Americans have become accustomed to the deductibility of the family expense. It has been a family-friendly provision that has preserved more money for divorcing families to divide between the two new households. Because women still make up the majority of alimony recipients due to a high number of mothers still staying home to raise the children, women’s advocates are concerned that females and children will take a financial hit from the change. 

The reason for the change? According to CNBC, the amendment will raise almost $7 billion in taxes in the next decade. 

DO NOT DELAY 

Any Floridian contemplating divorce should talk to an attorney immediately to understand what the change in the law could mean for his or her financial future. If the current law’s allowance of deductibility of alimony would benefit him or her individually or as a family unit after divorce, the lawyer can analyze the situation to determine whether the parties could act quickly enough to take advantage of the existing law. 

If a settlement agreement or divorce can be finalized before January 1, 2019, the current law would apply to the arrangement. Therefore, do not delay in talking to legal counsel. 

No Comments

Leave a comment
Comment Information
  • The Law Office of Daniel E. Forrest represents individuals in Fort Lauderdale in high-asset divorce matters. Daniel Forrest is board-certified family lawyer and mediator serving the South Florida area.
  • The Florida Bar - Board Certified | Marital & Family Law
  • AV(R) Preeminent Martindale-Hubbell(R) Lawyer Ratings
  • Rated By Super Lawyers | Rising Stars Daniel Forrest | SuperLawyers.com
  • Avvo Rating 10.0 Superb | Top Attorney Family
EMAIL US FOR A RESPONSE

Learn More About Your Legal Options

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office
450 East Las Olas Boulevard
Suite 1090
Fort Lauderdale, FL 33301

Toll Free: 800-642-8160
Phone: 954-800-5000
Fax: 954-252-4095
Map & Directions

Phone