Maryland couples who have previously battled through a divorce know that the process is stressful, complicated and time-consuming. For spouses who earn less than their partner, alimony may be granted to address any unfair economic circumstances after a divorce. Appealing for alimony, or spousal support, is sometimes necessary but can also add more stress to an already uncomfortable situation. Unfortunately, Maryland couples in the midst of divorce proceedings may face some confusion with regard to the impact of the new tax laws on alimony.
Just recently, the U.S. Congress approved tax reform legislation that is billed as providing most Americans with a significant tax break. Although this sounds great, it will bring some mighty big changes for future divorce proceedings. The new law does away with the tax deduction granted to those that pay alimony, as well as the requirement for those receiving alimony to report it as income on their tax returns. The change in the law is not expected to be applied retroactively.
It remains to be seen what the impact of the new tax laws will be on divorce proceedings. It would appear that the inability to deduct alimony payments will deter the incentive to consent to such an arrangement. Further, family law courts may be less disposed to award alimony, or significantly limit the payments, in view of the changes to the Internal Revenue Code.
No matter the situation, the elimination of this deduction will likely impact the divorce proceedings of many Maryland couples. Determining the current financial status of a marriage and divvying up marital assets is not an easy process. An experienced family law attorney can help sort through the new tax laws, including their impact on proposed alimony payments, in order to negotiate a fair and comprehensive divorce settlement.
Source: nbc-2.com, “Alimony will now be taxed under GOP bill,” Dec. 15, 2017