If you are planning a divorce, talk to an adviser about how changes in the Tax Cuts and Jobs Act (TCJA) will affect your taxable income.
Q: What is the Tax Cuts and Jobs Act?
A: Under the new law, for divorce agreements executed after Dec. 31, 2018, payers no longer receive a deduction for alimony payments and recipients no longer have to include them in taxable income.
Q: What is the impact of having to no longer report deductions
A: Assuming the payer is in a higher tax bracket and the recipient is in a lower tax bracket, there are tax savings to be generated by passing the tax burden to the person in the lower bracket — assuming you file by year-end 2018.
Q: How is the alimony payee and recipient affected by the new law?
A: Arguably, if you will be making sizable alimony payments, you have an incentive to finalize your agreement before the end of the year in order to get the tax benefits. If you stand to receive alimony, you may want to delay in order to receive payments tax free.
Q: Why has the alimony deduction been called a “divorce subsidy”?
A: Reportedly, the House Ways and Means Committee described the alimony deduction as a “divorce subsidy” because a divorced couple might pay less in their combined taxes than a married couple might. Repealing the deduction will add about $7 billion in new tax revenues over 10 years.
Q: How will this change divorce negotiations going forward?
A: The tax implications of an alimony payment should be factored into calculations and negotiations. Some lawyers suggest that eliminating the tax deduction limits their ability to help clients find common ground by maximizing each party’s post-divorce financial situation.
Q: What options are available that will help with this change?
A: Filing before year-end may provide you and your partner more options in settlement negotiations. Consult a financial professional with experience in divorce tax issues to understand your personal implications.
Our Rating is calculated using information the lawyer has included on
their profile in addition to the information we collect from state
bar associations and other organizations that license legal
professionals. Attorneys who claim their profiles and provide Avvo
with more information tend to have a higher rating than those who do
What determines Avvo Rating?Experience & background
Years licensed, work experience, education
Legal community recognition
Peer endorsements, associations, awards
Legal thought leadership
Publications, speaking engagements
This lawyer was disciplined by a state licensing authority in .
Disciplinary information may not be comprehensive, or updated. We recommend that you always check a lawyer's disciplinary status with their respective state bar association before hiring them.