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How the New Tax Law Would Alter Alimony


Congress’ massive tax overhaul is poised to have an impact on virtually every corner of American life—even divorces. One provision of the new tax law is the removal of the 75-year-old tax deduction for spousal support payments, also known as alimony or maintenance.

According to the current law, paying spouses are able to deduct the amount of alimony payments from their annual federal taxes. On the other hand, receiving spouses pay income taxes on the payment they receive.

However, after December 31, 2018, paying spouses will no longer be able to claim this tax deduction and receiving spouses will be relieved of paying income taxes for spousal support payments. The new rule wouldn’t affect anyone already paying maintenance, but it will mean huge changes for divorce proceedings in the years ahead.

Legal experts say this move could result in the divorce process being more drawn-out and costly. Divorce lawyers use this tax deduction as a means to reach a settlement easier since there was more money to split up between the parties. But without deduction, there is less money to go around.

More couples will end up fighting in court because they won’t be willing to pay as much, which disproportionally hurt women who tend to earn less and are more likely to receive alimony payments. In addition, the move could make it immensely difficult for lower-income couples.

Many attorneys also believe the change will have an impact on prenuptial—and postnuptial—agreements where someone agreed to pay a specified amount of spousal support in the event of a divorce. Since the presumption is that alimony could be deducted, current agreements may need to reflect the current law changes.

This new law could soon lead to a surge in married couples calling it quits.

If you are wondering how the new tax law may affect your divorce, contact our Dutchess County divorce attorney at the Law Office of Dennis R. Vetrano, Jr., LLC today.