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New Tax Law Eliminates Alimony Deduction

The Tax Cuts and Jobs Act of 2017 makes significant changes to the tax treatment of alimony payments. 1/15/2018
This legal insight was co-authored by Horack Talley lawyers Libby James (family law), Eddie Hinshaw (tax) and William Dolinger (intern and law student, University of Florida Levin College of Law)

The recently passed Tax Cuts and Jobs Act of 2017 makes significant changes to the tax treatment of alimony payments.

The act repeals the deduction for alimony and separate maintenance payments – but only for divorce and separation instruments entered into after December 31, 2018. The new law also means such payments will not be considered taxable income to the recipient spouse.

Keep in mind the new law does not apply to existing divorces and separation instruments, or to divorce and separation instruments executed on or before December 31, 2018.

The act contains a special rule which allows taxpayers to modify their existing divorce or separation instruments so that the new law would apply to their circumstances. This could be beneficial if either the alimony payer or recipient has a change in their income.

If you are currently separated or divorcing, the new alimony provisions are an added incentive to settle alimony issues and complete your agreements before the end of 2018.

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