How the change in tax laws will affect alimony

During a divorce, a Georgia couple may make a number of decisions regarding the division of their marital property and how much in alimony one spouse may pay. Under the current tax laws, alimony is deductible by the payer and taxable to the recipient. However, this will change starting in 2019.

Under the 2018 tax laws, family units were able to save more in taxes. The alimony payment was deducted from the paying former spouse’s income, potentially causing him or her to be in a lower tax bracket. The receiving former spouse paid the taxes only on the amount of alimony he or she received. This allowed families to save thousands in after-tax income.

Following the change in tax laws, the alimony payments being made will not be deductible by payers. This means that they may be paying more in taxes if they are in the higher tax bracket. The recipient will also not be taxed on the alimony payment. While this may seem like it would save the recipient more at first, the payers may pay less due to the fact that they must now put some of the payments towards taxes.

The divorce process can be extremely complex, especially if a former couple has married for years or decades, has obtained marital assets and property and has children. A family law attorney may help a spouse determine exactly what he or she has when it comes to property and if he or she is eligible for alimony. The attorney could then commence negotiating a comprehensive settlement agreement with the other party’s attorney.