Divorce is one of the most unpleasant things someone can go through. Emotions run high, feelings get hurt, and each party involved will end up losing quite a bit of money.
With that being said, there are a few new tax divorce rules that Americans should be aware of (especially as it relates to alimony payments):
After Dec 31st, alimony payments will no longer be tax-deductible and will be considered taxable income for the payee (which changes established rules that have been in place for over 70 years)
This has caused financial professionals and divorce lawyers to make a strong push to get their clients to get divorced before the end of the 2018 years
As a consequence of the Tax Cuts and Jobs Act, divorcing couples are rushing to get divorced before the end of the year. Under the current tax laws that exist, alimony payments are considered tax-deductible for the payor and taxable income for the recipient (or the payee). Under the new provision of the Tax Cuts and Jobs Act, the payor of alimony payments (the person sending their former spouse money) will no longer be able to deduct their payments when they file their taxes. Essentially, the spouse who is paying their former partner after they split will be paying more money in taxes and less to their former spouse.
“You’ve got to have a signed agreement before the end of the year if you want your permanent support to be tax-deductible and -includable,” said Peter M. Walzer, president of the American Academy of Matrimonial Lawyers.
Whether you owe money to the IRS or you have a State tax debt, our staff of Enrolled Agents and Tax Professionals can help you! We have years of experience negotiating with the IRS in all 50 States.
Call The Tax Defense Group today!