Alimony and child support payments are two issues that can be great sources of contention between divorcing spouses in New York. Soon-to-be exes should be aware that the Tax Cuts and Jobs Act has a significant role in how the two issues will be addressed for divorces that are finalized on or after Jan. 1, 2019.
The TCJA, which was passed in December 2017, includes provisions regarding alimony and child support. The changes in the tax law mean that couples who get divorced after the end of 2018 may find that their divorce is more expensive than they thought it would be.
For divorce agreements that are signed after the end of 2018, alimony will be considered a simple transfer of property and will have no income tax significances. Divorcing couples won’t be required to structure their alimony so that it is in compliance with tax law. Individuals required to pay alimony won’t be allowed to deduct the support payments from their taxable income. The recipients of alimony won’t have to report the money they receive as part of their taxable income.
While not having to report the alimony payments can be considered advantageous for the recipients, judges may take this into consideration when ruling on support. The amount awarded may be lowered to compensate for the deduction being removed for the payer.
An attorney who handles divorce and family law cases may work to protect the rights and interests of a divorcing client. If necessary, litigation may be used to resolve disputes regarding alimony and child support.