Winning Back-Office Strategies to Boost Your Business Agility
VIEWpoint Issue 1 | 2023
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The last thing on most people’s minds during a divorce is the tax treatment of the support payments that will eventually be made. However, with the recent passing of the Tax Cuts and Jobs Act, it will need to be considered. The 75-year-old provision allowing tax deductions for alimony paid didn’t make its way off the chopping block before the Act was signed into law on Dec. 22, 2017.
Under prior law, ex-spouses who paid alimony were able to deduct the expense from their federal income taxes, as well as ex-spouses receiving alimony payments had to claim the money as taxable income. Soon that will not be the case. Although the recent repeal of the provision won’t impact any couples already legally divorced or separated, and not even those finalizing the process in 2018, but it will impact those ending their marriages after this year. The repeal is only effective for any divorce or separation instruments:
Many individuals and their matrimonial lawyers fail to consider the tax consequences arising from payments made pursuant to a divorce or separation agreement. Even when tax considerations are raised in the divorce or separation agreement, there are numerous pitfalls that should be avoided. Working hand-and-hand with a CPA knowledgeable in divorces, like those at Doeren Mayhew, during the process can help you to understand the real tax consequences of these payments and your divorce.
If you think the new rules related to alimony payments might end up affecting you, contact Doeren Mayhew’s tax advisors to help you determine to what extent.
Want to reach the author? Email Joseph DeGennaro or contact him at 248.244.3033.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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