With the new tax bill on the cusp of being signed into law, what does that mean for you?
Alimony status will remain unchanged for 2018, but for 2019 will not be a deduction for payor or income to payee. Spousal Support (allocated) should be treated same.
This will likely cause changes to PA law for support calculations since the current system utilizes 40% difference of net income for those without children and 30% of net income for cases with kids.
This will also touch ancillary issues of who gets relief at tax time, since personal exemptions are gone but child credits are increased slightly.
Largest impact looks to be for divorcing couples with and without children who will have a future support component (Alimony) to the division of their property and are trying to produce a settlement agreement or Order from Judge or Master for Equitable Distribution. Bottom line, strategy will change, planning will change, negotiations will change, we will change too and respond accordingly.
Posts made in December 2017
New Tax Plan Could Mean Major Change for Alimony
It appears that the latest version of the newest Tax Reform will have a major impact on divorce negotiations currently in process and all new cases.
In short, presently Alimony is deductible to the payor and includable to the payee.
However, problems with each ex-spouse utilizing different figures for these payments have been the basis for removing them all together.
This will have a huge impact on the person paying alimony and all pending and future settlements or proposals in litigation will need to be scrutinized using a whole different perspective.
While nothing has passed yet, it appears that this aspect of the probable new law will remain when the final bill has its final vote. So stay tuned and be careful if you’re presently in the midst of divorce negotiations.
