Proponents of the new tax law that recently passed say that it will be a good thing for most Americans, including many here in Kentucky. However, not every provision contained in the new tax law provides an advantage. One area that is causing concern for some people is the fact that the tax deduction for alimony goes away on Jan. 1, 2019. On that date, those who receive alimony will no longer have to count it as income either. This could make things interesting for people anticipating a high asset divorce in 2018.
Many will want to get to the courthouses as soon as possible in order to finalize their proceedings by Dec. 31, 2018, since the changes in the law are not retroactive. On the other hand, others may try to delay the proceedings as long as possible and into 2019. Up through that date, any settlement or decree entered that includes an alimony provision allows the person making the payments to continue receiving the tax deduction, and those receiving the payments will continue having to include them as income at tax time.
At first, the new alimony law was to go into effect as of Jan. 1, 2018, which undoubtedly sent many people into a panic. Fortunately, it was determined that taxpayers should have another year to get their divorce settlements or decrees finished up before the new law takes effect. The first three months of nearly every year always see an increase in divorce filings, but many more could occur this year.
Those who work in the family law arena may be anticipating a noteworthy year when it comes to divorce. Kentucky residents who believe that alimony will be a factor in their divorces may benefit now more than ever from taking advantage of attorneys experienced not only in the intricacies of a high asset divorce, but in alimony as well. Alimony has historically been a contentious subject when couples end their marriages. It will be interesting to see how that changes over the next few months.
Source: wsj.com, “Tax Bill Eliminates Alimony Deductions“, Laura Saunders, Accessed on Jan. 13, 2018