2019 Alimony and Tax Laws
For 75 years tax laws surrounding alimony have stayed the same. This has meant the person receiving alimony would pay taxes on the amount and the person giving alimony could take the amount of alimony as a tax deduction. While this may not seem significant, for those in high-income tax brackets an increase or decrease in taxable income can change the percentage rate on their taxes by putting them in a higher or lower tax bracket. Additionally, the person receiving alimony would not be able to keep the entire amount as whatever percentage of taxes paid would be taken out of alimony monies. For example, a person receiving $1,000 a month in the 15% tax bracket would be keeping only $850 a month. But this is all going to change!
Now, starting on January 1, 2019 alimony will no longer be a tax deduction for the payor and the person receiving alimony will no longer have to pay taxes on the amount of alimony received. Essentially this is a bonus for the person receiving alimony and a penalty for the person ordered to pay alimony. Legal minds are predicting this change will likely make it more difficult to get awards for large amounts of alimony as the benefit of a lowered tax bracket will no longer be available. Affected parties will fight harder for lower alimony payments.
There are other problems the legal professionals are predicting because of the new 2019 Alimony and Tax Laws. As the new law is not retroactive, in other words not applicable to couples divorcing or separating prior to the deadline of December 31, 2018, there is predicted to be a huge rush on trying to have divorce cases finalized prior to the new law becoming effective. That is for those who suspect they will be the ones paying alimony. On the flip side will be the attorneys representing parties who will likely be receiving alimony who will be busy trying to delay tactics in hopes of delaying the final decision to after January 1, 2019. Already there is media hype encouraging persons who are considering a divorce in the near future, if he or she thinks they will be ordered to pay alimony, to get started right away on the proceedings. If too many people decide all of a sudden to pursue a divorce the courts will become even more backlogged than they already are, making final decisions months away–a plus for some, a minus for others.
Truly, there is no way around the new 2019 Alimony and Tax Law. All couples who are involved in the alimony scenario after December 31, 2028, will be affected. If you are already involved in a divorce proceeding talk with your attorney about how, depending on whether you will be giving or receiving, the case can be hurried up or slowed down. For those considering a divorce where alimony is likely to be an issue, now is the time to choose an experienced Family Law attorney and find out how the new law will affect your tax future.
If you live in Florida in Palm Beach, Martin, St. Lucie, Miami-Dade, Broward, Hillsborough, or Orange Counties, Washington DC, or New York Family Law Attorney Grant Gisondo offers a free, initial, in-office (in Palm Beach Gardens) consultation where he will meet with you personally and gladly answer your questions regarding the coming changes in tax laws surrounding alimony. His office hours are Monday through Friday from 9:00 a.m. to 5:00 p.m. and for new clients, Saturday from 8:30 a.m. to 1:00 p.m. Please call (561) 530-4568 to make an appointment.