How the New Tax Plan Effects Alimony (Part 1)

Currently, unless the parties agree otherwise, the person paying alimony can deduct their alimony payments and the person receiving alimony must claim the payments as income on their taxes.  With the new tax plan, beginning Jan. 1, 2019, the spouse paying alimony cannot deduct the payments, and the spouse receiving the money no longer has to pay taxes on it.

The old tax law theorized that allowing the paying spouse to deduct the payments would preserve more money overall to allocate between spouses, helping them afford to live separately.

So, if you are currently paying or receiving alimony, call me to see if you need to go back to court to recalculate your alimony payments.