Tax code changes could have major impact on alimony

Some Pennsylvania residents who had been considering divorce may speed up their plans to end their marriage after changes to the U.S. tax code were signed into law by President Donald Trump in December 2017. The changes, scheduled to go into effect at the beginning of 2019, could make it more expensive to pay alimony. Every year, around 800,000 Americans finalize their divorces, but in 2018, that number could see an increase as people act quickly to tax the changes into account.

Family law attorneys have commented that there have been an increasing number of requests for appointments and inquiries following the passage of the tax bill. Those with substantial assets who may expect to have significant spousal support burdens have noted particular concern about the change. Prior to the implementation of the changes, people who pay alimony could deduct it on their tax returns.

In 2019, things will change. Alimony will no longer be considered a tax-deductible expense. This makes it more expensive for the payer. It’s the opposite for the recipient. Currently, alimony is considered taxable income, but that will no longer be the case starting in 2019 for divorces finalized in that year. No change was made to child support, which remains non-deductible to the payer and not treated as income to the recipient.

These changes could have a significant impact on divorce negotiations, and family law attorneys will likely be confronted with these types of situations. People who are expecting to have to pay alimony will likely want their divorces settled and finalized before the end of 2018. Conversely, potential recipients now have a reason to delay the process.