Alimony Tax Deductions to be Eliminated in 2019
There is huge change coming to how alimony is going to be treated from a tax standpoint. Over the past 75 years, one factor remained the same: alimony was deductible for paying spouses, while receiving spouses were expected to pay income tax on any alimony received.
Effective January 1, 2019 alimony tax deduction will no longer exist! From a family law perspective, I anticipate clients who may be ordered to pay alimony to their spouse will need to take immediate action in order to receive a tax deduction on their alimony payments for years to come. Unfortunately, for those who do not take the necessary steps to file their case or move their existing case forward quickly, they risk not getting to Final Hearing prior to the elimination of alimony tax deduction.
In other words, being proactive is of the upmost importance for paying spouses. According to financial experts, under the Tax Cuts and Jobs Act, in all divorces after December 31, 2018, not only will alimony no longer be deductible for the payer, but no taxes will be due from the recipient. So recipients may want to delay until after January 1, 2019 and alimony paying spouses will want to get their cases to Court for final resolution prior to January 1, 2019.
For all Final Judgments entered after 2018, higher income spouses and those subject to higher tax brackets will lose up to 37% tax deduction on future alimony payments. As a Family Law attorney serving Orlando and other neighboring counties in Central Florida , it is my responsibility to educate my clients on how this could impact their dissolution of marriage case. Speaking from past experience, tax deductions on alimony payments have become a financial cushion for the paying spouse.
The problem is that it can take several months to get to a Final Hearing on your case and because so many alimony paying spouses will need to get a Final Judgment prior to the end of the year, there will be a flood of new filings or cases already filed that will be pushing to Final Hearing before the end of the year. This will create an even bigger back log in the Court system which could take even longer to get your case heard by the Judge. And of course the Judge may need time to consider the evidence at Trial and may take additional weeks to render the decision.
Although the loss of alimony tax deductibility presents paying spouses with significant challenges, our experienced Family Law attorneys at The Marks Law Firm, P.A. are keeping up to date with these alimony developments. The one thing I would say is if you may have to pay alimony, “Do not wait.”
To speak with one of our Family Law attorneys regarding your alimony concerns in Orlando and other neighboring counties in Central Florida, call our office and schedule a consultation today.