For many Florida residents, having the ability to deduct spousal support from their taxes takes a bit of the sting out of those payments. Unfortunately, the newly passed and signed Republican tax bill eliminates the alimony deduction. This could change the divorce negotiation landscape for couples across the nation.
Currently, spouses who are tasked with making alimony payments are able to claim a dollar-for-dollar tax deduction for those payments. The party receiving alimony must claim the payments as taxable income. Once the new tax plan goes into effect, alimony will be treated the same as child support, meaning that there is no deduction and no need to claim the money as income.
Those against the new plan fear that it will alter the way that divorce negotiations proceed in the years to come. If the paying spouse will no longer enjoy a tax credit, he or she might look for ways to lower spousal support payments and negotiate for a different division of assets. Those negotiations might also become more contentious.
For those in Florida who are thinking about filing for divorce, it may be comforting to know that the elimination of the alimony tax deduction won’t take effect until the end of 2018. There’s no need to rush a divorce filing in the early portion of the New Year. The better approach is to find a trusted family law attorney and begin creating a negotiation strategy that takes the tax changes and all other aspects of property division into account.
Source: bloomberg.com, “Why You Don’t Have to Rush to Get a Divorce Before 2018“, Alexis Leondis, Dec. 18, 2017