The United States government just recently signed a new tax bill into law, known as the Tax Cuts and Jobs Act. This is the biggest tax reform to come to the United States in years and therefore, it is important for everyone to know how it will impact them and in what ways. What a lot of people don’t realize is that sure, there will be a lot of income and sales tax changes but there will also be changes to how alimony is taxed. Individuals who are planning on getting divorced in 2018 will be heavily impacted by this bill so it is important to be aware of the changes.
The current tax law states that the party who is responsible for paying alimony to their former spouse is allowed to deduct alimony payments in his or her taxes. In addition, the law also currently allows the recipient of alimony to include it in his or her gross income for the year. The new law will no longer allow the individual who is obligated to make alimony payments to deduct them. In addition, the payments will also not be included in the alimony recipient’s gross income. For divorces finalized on or after January 1, 2018, the individual responsible for paying alimony will be taxed at their rates.
If you have questions about how the new bill will impact you, speak with an experienced attorney.
If you require compassionate and knowledgeable legal guidance for a matter of divorce, family or estate law, please contact the experienced attorneys at the Law Offices of Cynthia L. Hanley today.