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Divorce Tax Alert: New Tax Laws Prevent Deducting Alimony Payments


In divorce situations, an ex-spouse may become legally obligated to make spousal payments to the other party. Payments such as these are often substantial, which is why tax deductions have been an important part of alimony. Until now, an ex-spouse paying alimony has been able to deduct the amount paid on their federal income tax return, and the spouse receiving it must report alimony as income.

However, things are changing in 2019.

For payments required under divorce that are executed after Dec. 31, 2018, the new Tax Cuts and Jobs Act (TCJA) eliminates the deduction for alimony payments and recipients no longer have to include them in taxable income. For individuals who must pay alimony, this change can be expensive because the tax savings from being able to deduct alimony payments are significant.

As a result, more people are likely try and get their divorces finalized with alimony in 2018.

This change may make parties more likely to resist paying alimony and/or negotiate for lower payments. Additionally, less money is going to the family and more money is landing in the hands of the government.

In most instances, the spouse paying alimony is in a higher tax bracket than the spouse receiving alimony. Massachusetts has an Alimony Reform Act that now needs to be changed because it considers the alimony deduction as part of the agreement.

The implications of these changes combined with the new 2018 Mass. child support guidelines should be reviewed with an attorney. It is important to keep up with the changes and how they may impact your situation, including; the probable elimination of unallocated family support; the reduced flexibility in settlement talks; and the impact on some means tested public programs.

Massachusetts Family Law Attorneys

If you’re going through a divorce or other family matter, please contact our Bristol County family law attorneys at Percy Law Group, PC. We represent clients in divorce, child custody, alimony, medication, restraining orders, probate law and more.

Call (508) 206-9900 or contact us online today.

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