Divorce can be a messy and hard-to-negotiate process, and the recently passed Tax Cuts and Jobs Act may make that process even more difficult for couples with its abolishment of tax deductions on alimony payments. Before the TCJA, alimony payers could deduct payments that met the tax-law definition of alimony for federal income tax purpose, and alimony payment recipients always had to pay income tax on those payments. Now, for alimony payments required under divorce or separation instruments that are executed after December 31st, 2018, the deduction will be eliminated, and recipients of the affected payments will no longer have to include them as taxable income. With December 31st looming on the not-so-distant horizon, the pressure will be on some divorcing couples to finalize their divorces before the new rules on alimony deductions take effect in 2019, but for others, delaying a divorce until the new law takes effect may prove more beneficial.
Posts from August 2018.
By Allison Franz on August 13, 2018