VIEWpoint Issue 2 | 2018
Tax Cuts and Jobs Act – Highlights of What is Ahead for You...
VIEWpoint Issue 3 | 2017
Overview of the Business Valuation Process
Three Questions You May Have After You File Your Return
How Long Should You Keep Your Tax Returns on File?
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.
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