The new year brings new changes to taxes when it comes to getting a divorce
CHARLOTTE, NC (Chandler Morgan | WBTV) - If you’re looking to undo your I dos—you can expect some changes when it comes to your taxes— and it’s shifting the tax load especially when it comes to paying alimony.
“We’re kind of curious to see how its really going to impact one’s ability to pay," says Attorney with Jetton & Meredith, Eric Meredith.
As 2019 kicks off, new changes from the Trump administration’s 2017 Tax Cuts and Jobs Act are altering the way alimony—the support money paid between ex-spouses-- is taxed during divorces. In years before.
“Payments in alimony would be tax deductible to the payer, or the recipient would have to pay or claim income tax," says Meredith.
Attorney Eric Meredith says under the current law, typically, the higher-earning spouse who pays alimony— can deduct payments from their income… in return… the lower-earning spouse receiving the alimony-- is then taxed on that sum.
“If a payer paid $10,000 a month in alimony that would be an extra $120,000 a year that would be deducted from the payers," says Meredith.
But now, Meredith says, it’s the ex-spouse writing the check for alimony who gets taxed. Which means the possibility of lower amounts of alimony.
“When were negotiating one might say ‘Well hey that money is no longer available because I don’t have that tax benefit anymore'," says Meredith.
Meredith says each tax impact varies on a case by case basis, but the underlying change applies to all.
“The payer of alimony does not get the tax benefit for paying alimony and the recipient does not have to claim that as income or pay income tax on that amount," says Meredith.
This law goes into effect 2019—so that means even if you filed for divorce in 2018—Meredith says, unless you have a final decree order regarding alimony payments—then your case will now be affected by these new tax terms.
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