The recently enacted Tax Cuts and Jobs Act is likely to affect most Maryland residents and others around the country. The law changes how child credits, standard deductions and many other items are considered when doing one’s taxes. One significant change regarding alimony will have a major impact on those going through a divorce after the end of 2018.
The new tax law will eliminate a deduction that has been in place since 1942. Beginning in 2019, the person making alimony payments will no longer be able to deduct the amount on his or her tax return. Those receiving payments will not have to pay taxes on the alimony. This essentially reverses the provision set forth 76 years ago.
Experts believe that alimony payments will go down across the board because they will cost the payer more. The changes will be more positive for the government since it will receive more revenue. However, the couple going through a divorce will not likely see a positive outcome from this revision.
While a divorce is often complicated with many issues to address and resolve, advisors acknowledge that some couples may wish to finalize their divorces before the end of 2018. In particular, a spouse with a higher income may fine it advantageous to complete a divorce this year. A Maryland divorce attorney can help clients navigate through the complexities of the legal process, including helping them to understand how the new tax laws may affect alimony for them. An experienced lawyer will work to achieve a favorable outcome in the divorce process for the client.
Source: wtop.com, “New tax plan could result in stickier divorces“, Neal Augenstein, Feb. 12, 2018