Changes in how you are taxed (or are not) taxed on your alimony are right around the corner. The new Tax Cuts and Job Act (“TCJA”) provides that , effective January 1, 2019 any court ordered alimony or alimony agreed upon in a signed marital settlement agreement is no longer deductible to the payor or income to the recipient.
This is a big change – prior to January 1, 2019 alimony had to be reported as income and the payor was able to deduct it from his or her income.
There are still many uncertainties about the overall impact of this new law. We know what it means for any new alimony orders or agreements but the impact on existing alimony orders and agreements that pre-date January 1, 2019 is unclear. They may also be subject to the new law, but only in certain circumstances.
This is new territory for everyone, including judges, attorneys and accountants.There are still a lot of questions about how this will impact divorcing or divorced individuals, including what flexibility parties will have to exempt themselves from application of the TCJA, and how courts will consider the issue from the payor and recipients’ perspectives.
There is no question, however, that anyone who is facing the prospect of alimony, or who currently receives or pays alimony, will benefit from talking to an attorney about their options as soon as possible. One of our Annapolis attorneys at Hillman, Brown and Darrow can help you today.
Posted in: HBD Law News