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Tax deductions on alimony payments: What you should know for 2019

In the past, divorced parties responsible for paying alimony to an ex-spouse had the ability to deduct such amounts from their federal income taxes. However, amid the significant tax bill signed into law in 2017, that rule is about to change. If you are paying or will pay spousal support, now is the time to pay attention.

The Tax Cuts and Jobs Act: An overview

In December 2017, President Trump signed into law a sweeping new tax bill known as the Tax Cuts and Jobs Act. The bill is the biggest tax legislation passed in decades.

Although President Trump signed the new law over a year ago, it hasn't really been in the forefront of the public, simply because it has yet to take effect-until now.

2019 is fast approaching which means we all will be filing our taxes for 2018, the year the changes in the tax law take effect and drastically impact many filings.

What the new tax bill means for you as a potential future alimony payor

The new tax law includes significant changes: New tax brackets, mortgage interest deductions, child tax credits and more. Another change involves the present-day deduction for alimony payments.

In the past, alimony payors were able to deduct alimony payments they made to their ex-spouse. If you are someone who will be divorcing after this year and will likely be responsible for spousal support, you will no longer have that option.

Under the new tax law, alimony obligations that are part of a written and signed divorce agreement or decree executed after December 31, 2018 will no longer be tax-deductible for the party responsible for paying the spousal support.

The bottom line

If you're thinking about getting divorced and will likely be responsible for paying spousal support, you may want to think about doing it sooner than later.

What if I'm already paying spousal support?

Although the tax bill is not favorable to future payors, it does preserve the deduction for those currently paying alimony.

If you are currently paying alimony, the new law does not affect you. The new tax law that takes effect in 2019 only applies to new payors. You will still be able to deduct your alimony payments on your federal income taxes as you normally would next year and in the years to come.

The new law will also not apply to you if you need to seek to modify your existing alimony payments in 2019 or thereafter.

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