Due to the new tax law, spouses paying alimony won’t be able to take a deduction while spouses receiving alimony will no longer have to report it as income. The alimony deduction has been in the tax code since 1942.
Some experts are predicting a surge in divorces this year as spouses paying alimony seek to take advantage of the deduction before it is eliminated.
The change doesn’t affect people who divorce or sign a separation agreement before 2019, according to reports.
Spouses negotiating alimony payments may try to pay less when the change takes effect because there will be no tax savings, according to some experts. Women are more likely to be hurt by the change as they negotiate divorce terms.
According to the U.S. Census Bureau statistics, 98 percent of the 243,000 people who received alimony payments last year were women.
Elimination of the deduction will lead to higher revenues overall for the government because the person who deduced the alimony was likely in a higher tax bracket than the spouse declaring the alimony as income. Eliminating the deduction could also push the alimony payer into a higher tax bracket.
To determine alimony, the court looks at the respective needs and abilities of both parties.These factors are generally referred to as the alimony factors:
- Standard of Living
- Duration of the Marriage
- Physical and Emotional Condition of the Parties
- Financial Resources of Each Party
- Time Needed to Obtain Employment
- Contribution to the Marriage
- Financial Condition of the Parties
- Any Other Relevant Factors
If you have questions about alimony or spousal support, let our Pasco County Divorce Lawyers at Whittel & Melton help you. Call us today at 727-847-2299 or contact us online for a free consultation.