As many residents of Lakeland, Florida, may remember, Congress passed a major overhaul to the tax code about a year ago. As part of this change, Congress decided to alter the way alimony, which may also be referred to as maintenance in Florida, is handled for income tax purposes.
Currently, that is, for court orders entered between now and the end of the year, paying alimony qualifies the person paying for a tax deduction. On the other hand, the person receiving the alimony has to report it on his taxes as income.
While there are some prerequisites one must satisfy before qualifying for the deduction, the tax benefits of paying alimony has historically induced some people to agree to pay it in order to resolve their family law cases.
For divorces and separations finalized after the first of the year, however, the tax treatment will be different. Specifically, alimony will not have tax consequences either way. If a person pays alimony, he will not get the benefit of a tax deduction. If a person receives alimony, she will not have to report it as income.
As mentioned, those who finalize their alimony orders before the end of the year will have those payments handled under the current tax rules. In some circumstances, it might be beneficial to try to get their legal matter resolved quickly, that is, before the law officially changes. In other cases, though, rushing may not be worth the tax savings.
In any event, Florida residents who are facing the possibility of paying maintenance as part of a divorce or separation should be aware of this development and plan accordingly with the help of their family law attorney.