Tax Code Amendments for 2019 and Beyond
If you got divorced and were ordered to pay alimony at any time since the 1940’s, those payments could be deducted on your federal income tax return. This means that your taxable income, and your tax liability, was decreased. On the flip side, if you were the recipient of alimony, you were required to claim those payments as income on your federal income tax return. You were also required to pay taxes on them.
All of that will change in 2019, when the overhaul of the tax code will go into effect. The deduction that made alimony more palatable for those obligated to pay will no longer exist, and recipients will no longer be required to report alimony payments as income. While some of the new provisions of the tax code expire in 2025, the alimony provision as written is permanent. This could have interesting implications as Marital Settlement Agreements are negotiated for the remainder of 2018 and in years to come.
According to the most current available federal statistics, more than 800,000 couples divorced in 2016, more than 600,000 people deducted alimony on their federal income tax returns in 2015, and more than 400,000 people reported alimony as income on their federal income tax returns in 2015. Consequences of the new provisions of the tax code are sure to be far-reaching.
If you are currently involved in divorce litigation, or if you are considering divorce, please contact Katherine for a consultation at email@example.com