In divorce matters, alimony is awarded by the court as a form of support to a spouse who makes less money than the other spouse. Alimony is provided as supplemental income for the individual receiving the funds after a divorce. These funds are a necessity for many families who experienced an unequal financial shift as a result of a divorce. While many alimony awards were court ordered, others stipulated to alimony awards as there were benefits to providing alimony payments, including its tax-free nature for payor spouses. However, the new tax law that recently passed will have various impacts on families across the United States, including those in the state of Florida seeking alimony payments. If you or someone you know is going through a divorce and would like to request alimony, contact me today for a review of your claim.
TAX IMPLICATIONS FOR PAYOR SPOUSE
A payor spouse is a spouse who is obligated to make payments of alimony to the spouse that makes less money. The most significant implication of the tax law for payor spouses is the impact on alimony payments. Currently, alimony payments are not considered income. Therefore, individuals who have paid money to a spouse as a part of a settlement or court order can deduct those funds by adjusting their gross income. This allows the payor spouse’s overall tax obligation to decrease. However, under the new tax law, spouses who agree or are ordered to pay alimony will no longer qualify for a tax deduction.
ALIMONY DEDUCTION ELIMINATION
The elimination of the alimony deduction becomes effective on December 28, 2018. The elimination will not impact anyone divorcing before that date. Also, spouses who are already paying alimony will not be affected by the tax law changes.
SPEAK WITH AN ATTORNEY
The best way to determine how the tax law changes may impact you or your loved one is to speak with an experienced divorce attorney. There are many potential impacts of the tax law for which you or your spouse may not account. For example, you may need to speak with an attorney to determine whether your pre or postnuptial agreement is still valid. If a prenuptial agreement included provisions for a specific payment structure, you might want to speak with an attorney to see whether revisions are necessary to reflect the parties’ intentions.
MIAMI DIVORCE ATTORNEY
Financial support to care for yourself after a divorce is a critical form of income. When parties separate, they often rely on the dual income received. During a divorce, I often hear of the need for supplemental funds to allow you to meet your basic needs. The new tax law will impact the overall monies you obtain beginning in December 2018. If you or your loved one has become a party to a divorce action in Miami, Florida, speak with an experienced attorney who can assist you. For an initial consultation, contact me today.