The Tax Bill of 2017 proposes significant changes to our nation’s current tax system. However., many taxpayers overlook the possible harm this tax bill may cause if they are going through a divorce and subject to alimony payments. A lesser known provision of the tax bill will fundamentally alter the present alimony system.
What Does This Mean?
For example, the new rules will make alimony non-deductible for the person paying it, and untaxed for the person receiving it. However, these rules only affect a divorce commenced after December 31, 2018. Many legal professionals anticipate that these new rules will result in judges awarding significantly lower alimonies. Without the incentive of a tax deduction, those subject to alimony payments may be more reluctant to agree to certain payment schedules. As a result, some lawyers see a potential 10-15% reduction in future alimony arrangements.
The law firm of Mattleman, Weinroth & Miller, P.C., is composed of experienced divorce and family law attorneys throughout the states of New Jersey, Pennsylvania and Delaware. Please contact the office to schedule a free initial consultation and get any questions answered regarding your specific case.