The tax bill passed in December eliminates the tax deduction for alimony payments. That means that the divorce process could become even more drawn-out and expensive, and prove to be especially difficult for lower-income couples.
The alimony reduction repeal would not affect divorces that take place prior to December 31, 2018, but it could have a huge negative impact on divorce proceedings in the years ahead. According to the IRS, approximately 600,000 Americans claimed an alimony deduction on their 2015 tax returns.
Alimony payments are currently tax-free for the payer and are taxed like regular income for the recipient. Recipients are usually in a lower tax bracket because they earn less, therefore, more money remains with the family. If the alimony tax deduction is eliminated, it could also complicate how child support is calculated and how assets are divided. It could also lead to more acrimonious divorces.
Experts warn that those who are considering prenuptial agreements prior to marriage should also be mindful of this change in the law. Both prenuptial and postnuptial agreements usually contain clauses that define what alimony would be like if the couple were to divorce.
If you are considering a divorce, talk to an experienced Towson divorce lawyer at Huesman, Jones & Miles, LLC, so that you can be financially prepared for what is ahead. Our lawyers provide personal attention to each of our clients and will work diligently to resolve your legal matters quickly and reasonably – we help you sleep at night. Call 443-589-0150 to schedule a confidential consultation, or contact us online. We serve clients throughout the state of Maryland.