Foster & Mazzie LLC

New year, new tax breakdown for divorces

As 2019 begins, many Americans will more directly see the effects of the Tax Cuts and Jobs Act (TCJA), which Congress passed in December 2017. These changes could be positive or negative when it comes time to file, depending on who you are.

One group of people who may notice a difference is divorcees. When your divorce was finalized will have an impact on your taxes.

Under the new tax law, anyone whose divorce is finalized after December 31, 2018 will be subject to new tax stipulations, which state that alimony payers are not able to write off their payments as taxable income, but recipients of alimony can write off those funds. Divorces finalized before December 31, 2018 have the inverse tax impact – payers can write off those payments as a deduction and recipients cannot.

Historical precedent

This overhaul of alimony returns Americans to a system of determining taxable income for divorced couples established in 1917. The U.S. Supreme Court ruled at the time that alimony paid to a “wife” was not taxable income. A tax law in 1942 changed that, but the TCJA overhauls that law to return to the pre-1942 standard.

The trouble for divorcing couples where alimony will be a factor in the agreement is there will be fewer after-tax dollars to go around. It could set up many couples for contentious disputes that may not have occurred otherwise.

However, there are still ways for couples to come up with an agreement that keeps both parties living comfortable, fulfilling lives after divorce without financial hardship. While this law may change alimony's impact on taxes, it does not mean divorcees will be left without the necessary funds to get by. 

No Comments

Leave a comment
Comment Information
AV Preeminent | Peer rated for highest level of professional excellence Super Lawyers
Contact Us

For More Information Or To Schedule A Consultation

Insurance carriers have looked to Foster & Mazzie LLC for their defense needs since 1989. Contact us online or call 973-200-8619. Our lawyers are available in our Totowa office weekdays from 7 a.m. to 7 p.m. (7 a.m. to 5 p.m. on Fridays) and nights, weekends and at our 10 Rockefeller Plaza office by appointment.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Firm Location

Foster & Mazzie LLC

P.O. Box

Foster & Mazzie LLC

By Appointment Only

Totowa Office
10 Furler Street
Totowa, NJ 07512

Toll Free: 800-369-8528
Phone: 973-200-8619
Fax: 973-785-9220
Totowa Law Office Map

New York Office
10 Rockefeller Plaza
Suite 1015
New York, NY 10020

Toll Free: 800-369-8528
Phone: 973-200-8619
Fax: 973-785-9220
Map & Directions

Totowa Office
(Mailing Address)
P.O. Box 209
Totowa, NJ 07511

Toll Free: 800-369-8528
Phone: 973-200-8619
Fax: 973-785-9220

973-785-9220 - Fax