The new 2017 Tax Code will influence your spousal support payments. This law will go into effect January 1, 2019. If your divorce becomes finalized after December 30, 2018 this ruling will affect you. Here are the key takeaways and deadline dates to keep in mind:
Before the 2017 change in the tax code:
The spouse who earned more could deduct the alimony paid to the spouse who made less. Spousal support was able to be deducted by the payer, based on pre-tax dollars. The taxable responsibility rested on the alimony payment recipient, not the payer.
Divorces finalized in 2019 and beyond:
The payer cannot deduct the alimony payment. The receiving spouse does not have to claim this support as income. The higher-earning spouse will no longer be allowed to claim the alimony deduction. They will pay taxes on the spousal support payment. The ex-spouse who earned less will no longer be responsible for paying taxes on their alimony.
September 30, 2018 deadline:
To take advantage of this previous tax code, courts must receive court mandated support orders by September 30, 2018 in order to be heard by the end of 2018.
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Note: This information is general in nature and should not be construed as legal/financial/tax advice. You should work with your attorney, financial or tax professional to determine what will work best for your situation.