New Federal Tax Plan May Increase Spousal Maintenance Expenses

Posted on in Alimony/Spousal Support

tax law, DuPage County family law attorneyThe sweeping new tax law that President Trump signed in December of last year may significantly affect those who pay alimony or spousal maintenance in the future. One provision of the tax plan eliminates the 75-year-old tax deduction for maintenance payments. More than 800,000 couples get divorced each year, and in many of those cases, one spouse is required to pay some sort of spousal maintenance. Interestingly, some divorce attorneys are noticing an increase in divorce filings that may be due to couples wanting to finalize their divorce before the new alimony provision takes effect in 2019. Any divorce that finalizes on or after January 1, 2019 will be subject to the new law.

Tax Plan Eliminates Alimony Tax Deduction

Under the current tax laws, those who pay spousal maintenance are usually able to deduct those payments from their taxes. Right now, every dollar which a person pays in maintenance payments reduces the payer’s taxable income by the same amount. However, the new tax law will disallow divorcees from deducting spousal maintenance payments. Those who finalize their divorce in 2018 before the new plan takes place will get to deduct their spousal maintenance payments for the entire duration of their payment order. Some are concerned that the elimination of the deduction will increase the financial strain of paying maintenance and deprive the lower-earning spouse of vital income.

The new tax plan may make reaching agreements more difficult during divorce negotiations. Some experts predict that the elimination of the tax deduction for maintenance payments will lead to less spousal support being awarded to those getting divorced because some of that money will have to go towards taxes. Critics of the new tax plan fear that without the maintenance deduction, higher-earning spouses will not pay as much to their exes. The change is expected to result in an additional $8.3 billion paid in taxes from divorced couples over the next 10 years. Eliminating the alimony tax deduction may also complicate how child support is calculated and how property is divided during a divorce, as spousal maintenance is a factor in both of those determinations.

Contact a Knowledgeable Divorce Attorney

If you are considering divorce, a Wheaton family law attorney can help. At Andrew Cores Family Law Group, our dedicated divorce attorneys work with clients to help them achieve their financial and personal goals. To set up a free, confidential consultation, call 630-871-1002 today.


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