Coming in 2019, there will be drastic changes to the way alimony payments are taxed thanks to the release of the “Tax Cuts and Jobs Act“. While these changes will only apply to alimony agreements signed after December 31st, 2018 (meaning existing alimony agreements and taxation will remain unchanged), these changes are significant, and may cause you to either wish to finalize your divorce in 2018, or wait until 2019 depending on whether or plan to make alimony payments, or receive them.
So what exactly are the changes coming to how alimony is taxed, and how might these changes affect you? Let’s take a look.
New Laws for Alimony Taxation for Alimony Payors, Spring Lake Spousal Support and Alimony Attorney
Under the current taxation laws, individuals who are paying alimony to a former spouse are allowed to deduct those alimony payments from their income before paying income tax.
In other words, if you earn $150,000 annually for example, and make annual alimony payments to a former spouse of $30,000, you would actually only pay income tax on $120,000 (subtracting your alimony payments from your total income).
However, according to the new laws (again, only applicable to alimony agreements signed after 2018 ends), alimony payors will no longer be able to deduct alimony payments from their income, meaning in the example above that person would instead pay income tax on the full $150,000 salary even though they are paying $30,000 per year in the form of alimony.
Obviously, this new law represents a significant change to all alimony obligors (the legal term for individuals making alimony payments), and as such may represent a compelling reason to speak with your Spring Lake divorce attorney, and hurry up and get your divorce finalized under the existing alimony tax laws before this new law takes affect starting in 2019.
New Laws for Alimony Taxation for Alimony Recipients, Point Pleasant Divorce and Alimony Lawyer
On the other hand, if you expect to receive alimony payments as part of your divorce settlement agreement, the exact opposite of what was discussed in the section above may apply.
Currently, individuals who are the recipients of alimony payments must declare those same payments as part of their income, meaning they pay income taxes on whatever alimony they are receiving yearly. However, when the Tax Cuts and Jobs Act takes affect in 2019, alimony recipients will no longer pay income tax on the alimony that they are being paid.
Again, this creates a scenario where if you expect to receive alimony and spousal support as a part of your divorce settlement agreement, you may wish to speak with your Point Pleasant divorce and alimony lawyer about delaying the resolution of your divorce until 2019 begins in order to take advantage of this significant change to your own finances.
Contact an Ocean County Alimony and Divorce Attorney Today
While it is important to stress that this change to the way alimony is taxed will only apply to divorce agreements which are signed after December 31st, 2018, it is yet to be seen whether or not such a change will open the door for alimony modification requests for alimony agreements which exist under the current laws, only time will tell.
However, whether you are expecting to pay alimony as a part of your divorce settlement agreement, or expecting to receive alimony as a part of your divorce settlement agreement, one of the most important things you can do during any divorce is to speak with a knowledgeable and experienced divorce attorney regarding your options, how alimony may be decided in your unique situation, and how exactly your attorney may be able to help you and your family.
At The Bronzino Law Firm, we have extensive experience helping our clients and their families to reach fair, cost-effective, and highly personalized solutions to divorce and family law issues of all kinds in towns across Ocean County and Monmouth County, including Point Pleasant, Spring Lake, Toms River, Sea Girt, Brick, Jackson, Howell, Wall, Ocean, and the surrounding communities.
To speak with Attorney Peter Bronzino and our legal team today in a free and confidential consultation regarding your unique needs and concerns when it comes to any kind of divorce-related issue such as child custody, child support, alimony, or the division of marital assets, or any other kind of family law issue such as a post-divorce modification or domestic violence dispute, please contact us online, or through our Brick, NJ office at (732) 812-3102.