If you're currently paying or receiving alimony -- or if you could pay or receive alimony because of a pending divorce -- you're probably curious how the new Tax Cuts and Jobs Act will affect you.
Congress passed the new tax law in December. Yes, it will affect divorces in Florida and the rest of the nation. However, if you've already finalized your divorce or plan on finalizing your divorce before the end of 2018, then the new law will not affect you.
More details on how the Tax Cuts and Jobs Act affects alimony payments
Under previous tax rules, spouses who pay alimony can deduct the payments from their net income each year, which offers a considerable tax break. This tax break is even more substantial when it moves the alimony payer to a lower tax bracket. At the same time, under the old tax rules, the recipients of alimony have to pay income taxes on the money. The Tax Cuts and Jobs Act will change all this.
After the law goes into effect for divorced spouses on Jan. 1, 2019, all divorces finalized on or after that date will be subject to the new rules. Spouses who pay alimony will have to pay income taxes on the money they send to their ex-spouses. Meanwhile, recipients of alimony will not have to pay income taxes on the funds. Again, it's important to remember that these new rules will only affect divorces that finalize on or after Jan. 1, 2019. Any divorces that finalize before this date will be subject to the previous rules.
Are you navigating an alimony dispute?
Spouses who have to pay alimony usually want to pay as little as possible and spouses who receive alimony usually want to receive as much as possible. Regardless of what side of an alimony dispute you happen to be on, a detailed understanding of Florida family law will help you navigate the issue in a way that honors your rights and obligations under the law.