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Tax changes will affect alimony

Starting in 2019, the federal tax code could change the way California divorces are handled. For the past 75 years, alimony has been tax deductible for the payer while the payees were required to pay income taxes on any alimony received. After December 31, 2018, alimony will no longer be tax deductible for the payer.

This change is a result of the enactment of the Tax Cuts and Jobs Act of 2018. The tax code change is expected to alter the way alimony is calculated because future payers will want to compensate for the loss of the deduction. Since recipients will no longer be required to cover income tax on the payments, their burden could be lowered.

Some legal experts believe that the change may encourage divorce litigants to go to court rather than settling their cases because the tax code change takes away an incentive for settlement. Another potential impact is that some couples may decide to stay together because divorce will no longer be affordable without the tax break. On the other hand, many couples are rushing to get their divorces finalized before the new laws take effect.

Potential divorce litigants with questions about spousal support could benefit from consulting an attorney. The laws that govern alimony vary from state to state, but the tax code changes will affect divorce litigants throughout the U.S.

A divorce attorney may be able to help clients negotiate a favorable settlement and prepare the case for trial if a settlement agreement cannot be reached. Legal counsel could also help clients who want to request a modification of the amount of alimony they are ordered to pay.

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