The recently proposed tax reform bill, called the Tax Cuts and Jobs Act, may bring some changes to the tax consequences related to alimony or spousal maintenance. The current tax law for alimony states that the individual who is required to pay alimony to his or her ex-spouse will be able to deduct these expenses from their federal income taxes. In addition, the individual who receives alimony payments will be able to claim the money they receive as taxable income. However, this is all about to change.
The tax reform bill would make alimony payments tax-free to the individual who receives payments if their divorce is executed beginning on January 1, 2018, and after. It is important to note that any current divorces that have an alimony agreement would not be impacted by this change. Another aspect of the bill would eliminate the alimony tax deduction for the individual who is responsible for paying alimony.
In New York State, alimony (also known as spousal maintenance) is typically taken into account when one spouse cannot financially support themselves after the divorce. Of course, there are several different reasons for which alimony may be awarded and for how long it will be awarded. Regardless, it is important to speak with an experienced attorney who has an understanding of how the new tax bill can impact divorces in 2018.
If you require experienced legal representation for any of your divorce and family law matters, contact the Law Offices of Mark S. Paige, P.C. today to schedule a consultation.