The Tax Cuts and Jobs Act was passed roughly a year ago and several changes were instituted at the beginning of 2018 for Maryland taxpayers and others around the country. However, one significant revision will be effective until the year is over. Alimony will be taxed differently after the new year and this could cause a rush of activity to get divorces finalized before year end.
Currently, the spouse paying alimony is allowed to deduct that amount from his or her taxable income. The receiver, on the other hand, is required to pay income taxes on the alimony. The new legislation will reverse this, both eliminating the deduction on alimony payments and the tax on the amount received. The tax burden has effectively been shifted from the person receiving alimony to the individual paying it. Supposedly, the government will realize more income from taxes as a result.
However, matrimonial law experts don’t view this favorably for the recipients of alimony. They strongly believe there will be more heated negotiations for settlement amounts since the tax break will be eliminated. The awareness of this possible tax incentive has spurred many couples who are seeking divorces to get the proceedings completed before Dec. 31.
Alimony, or spousal support, is just one issue to be addressed when a couple decides to get a divorce. To ensure that one’s needs — both current and future — are considered in deliberations, contact a Maryland attorney for assistance. An experienced lawyer will work with clients through every step of the process to achieve the most favorable outcome possible.