As if negotiating divorce settlements was not complex (and contentious) enough, the process is about to get even more complicated, thanks to a major overhaul of the tax code regarding alimony. Under the Tax Cuts and Jobs Act (TCJA), which goes into effect January 1, 2019, sweeping changes are set to upend 75 years’ worth of established rules regarding alimony — namely, that it is deductible for the payer and is taxable for the recipient.
As of the new year, this equation is completely turned on its head: For all divorce decrees finalized after December 31, 2018, payers will no longer be able to deduct alimony from their taxes, and recipients will no longer be required to pay taxes on alimony received.
Family law attorneys are being flooded with questions regarding these dramatic changes, and although there are still some areas that have yet to be fleshed out, there are a number of things that are either likely or certain to play out. Here is what we know:
We cannot emphasize enough how sweeping these changes are, and how important it is to make sure you are being given clear advice on how they will affect your situation.
With a combined 30 years in family law, the attorneys at Jones Family Law Group, LLC, will provide the legal guidance you need. For questions or to schedule a confidential consultation, contact us today.
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