New tax plan could affect alimony payments

New tax plan could affect alimony payments

On Behalf of | Dec 29, 2017 | Alimony And Child Support, Firm News |

The government is changing the way it treats the tax implications of marital separation. A new tax bill passed and was recently signed into law by the president. Within the bill lays policy changes that can affect the way that Wyoming residents will look at alimony

The new laws will not go into effect until 2019, so it apparently does not affect current alimony arrangements or any of those that will be made in the next year. The current approach is that alimony payments are deducted from the taxable income of the person who pays the spousal support payment. The person receiving the payments must claim them as taxable income. With the new policy, all this changes and is flipped upside down. 

Now, payers will not be able to deduct payments, and the recipients do not need to claim them. Proponents say that the deduction will add more tax revenue and end what some call a divorce subsidy. Some critics feel that the repeal of the 75-year-old policy will result in greater financial difficulty for individuals already undergoing a tough transition in life. 

When a person in Wyoming considers divorce, there are many details to consider. Financially, the individual will need to determine an equitable split of the marital resources. For many, at least 243,000 people as reported by the Census Bureau in 2015, alimony payments are also part of a final judgment of divorce. An experienced family law attorney can offer guidance and legal advice for any person who needs assistance with the transition. 

Source: New York Post, “Here’s how the tax plan could change divorce in a big way“, Dec. 22, 2017