Under the new Tax Cuts and Jobs Act (TCJA), changes have been made to how alimony is deducted from your taxes. If you are divorced and paying spousal support, you probably already know that the tax deduction for the payer spouse is an important financial issue that directly affects you. Unfortunately, TCJA will have a significant impact on how you deduct your alimony payments on your taxes. In this blog, we explain what these new changes will mean for couples getting divorced.
Prior to the signing of the Tax Cuts and Jobs Act, payments made to a spouse as part of an alimony agreement could be deducted by the payer spouse on their federal income taxes. The recipient on the other hand, had to report the payments they received as part of their taxable income when doing their taxes.
The good news for alimony payers is that the old tax law will still be in effect for divorce settlements that have been finalized before January 1, 2019. However, after 2018, deductions for alimony payments will be gone. This means that if your divorce isn’t finished up by the end of 2018, you can miss out on a valuable tax deduction that can help you maintain your financial stability after your divorce.
In addition to this change, spouses who receive spousal support don’t have to claim it as part of their taxable income any longer. So if you are getting divorced this year and anticipate that you will be awarded spousal support, it might benefit you to put off your divorce until after the end of the year.
The new tax code changes means that divorces will likely get even messier as spouses struggle to either speed up or delay their divorce proceedings to get the tax benefit they are looking for.
No matter what your alimony situation is, you should consult with a divorce attorney to discuss if the new changes will impact your divorce agreement. Don’t hesitate to speak with a legal professional, waiting to long can result with you being left at a financial disadvantage.
The lawyers at Kallen Law Firm can help you modify your existing divorce agreement to fit your current financial needs. Our friendly attorneys can review your divorce settlement and determine how to approach your tax situation. Let us put our skills to work for you today.
Call (314) 441-7793,or contact us to speak with one of our St. Louis divorce attorneys.