The sweeping new tax law that President Trump signed in December of last year may significantly affect those who pay alimony or spousal maintenance in the future. One provision of the tax plan eliminates the 75-year-old tax deduction for maintenance payments. More than 800,000 couples get divorced each year, and in many of those cases, one spouse is required to pay some sort of spousal maintenance. Interestingly, some divorce attorneys are noticing an increase in divorce filings that may be due to couples wanting to finalize their divorce before the new alimony provision takes effect in 2019. Any divorce that finalizes on or after January 1, 2019 will be subject to the new law.
Tax Plan Eliminates Alimony Tax Deduction
Under the current tax laws, those who pay spousal maintenance are usually able to deduct those payments from their taxes. Right now, every dollar which a person pays in maintenance payments reduces the payer’s taxable income by the same amount. However, the new tax law will disallow divorcees from deducting spousal maintenance payments. Those who finalize their divorce in 2018 before the new plan takes place will get to deduct their spousal maintenance payments for the entire duration of their payment order. Some are concerned that the elimination of the deduction will increase the financial strain of paying maintenance and deprive the lower-earning spouse of vital income.
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