On December 22, 2017, President Donald Trump signed the new tax bill into law. While, on its face, H.R.1, known as the Tax Cuts and Jobs Act, appears to haveno correlation with family law, the new tax law actually includes terms relating to alimony, specifically, terms that will drastically change the law you may be familiar with today. Most of the new law’s provisions will take effect on January 1, 2018. However, the new alimony law applies to any divorce or separation decree executed after December 31, 2018 or any decree executed before December 31, 2018 and modified after this date “if the modification expressly provides that [the new tax rules regarding alimony] apply to such modification.”
Section 11051 of the new tax law is entitled “Repeal of Deduction for Alimony Payments.” The current law
as outlined in Section 215 of the tax code allows for alimony and support maintenance payments to be deductible by the payor spouse and includible in income by the recipient spouse. The new tax law eliminates Section 215 of the tax code entirely. Now, alimony and support maintenance payments are not deductible by the payor spouse, and alimony and support maintenance payments are not included in income. Specifically, alimony and separate maintenance payments are removed from the definition of gross income found in Section 61 of the tax code. The new law mandates that income used for alimony and support payments be taxed at the rate applicable to the payor spouse rather than that of the recipient spouse.
To reiterate the new law’s implementation timeline, there are two scenarios:
- The law automatically applies to all divorces beginning January 1, 2019; or
- The law applies to the modification of any divorce finalized prior to January 1, 2019, so long as the modification documents specifically say so.
Based on this timeline, the next year is critical for considering your options if you are considering filing for divorce. The taxability of alimony can be beneficial to one party and detrimental to the other. Until the new law takes effect, the option remains available to take advantage of the taxability or deductibility of alimony. If you are seeking a Tampa family lawyer or divorce attorney, Kirkner Family Law Group is here to help you to navigate through the changes in the alimony law. Contact us online or at 813-254-0156.