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Alimony Awards will be Subject to New Federal Tax Laws


For Florida couples contemplating a divorce, now is the time to get started. 2019 will bring some new tax regulations into effect that can have negative consequences on your income tax returns depending on whether you’re the spouse paying or receiving an alimony award.

Currently, spouses who are paying alimony to their ex-spouse have the right to claim the entire amount as a deduction on their federal income taxes. In some cases, this may lower their income for the year enough that it bumps them down a tax bracket, providing even more savings. The spouse who receives the alimony award had the burden of claiming the entire amount on their taxes as income. This is obviously a less desirable tax situation for the recipient.

Changes to Income and Deductions for Alimony Payments in 2019

Starting in 2019, the new federal tax law mandates that spouses who pay alimony are no longer allowed to claim deductions related to alimony payments made. Spouses who receive alimony are no longer required to report this as added income.  The caveat is that this is only applicable to divorce settlements and alimony awards issued on or after January 1, 2019. For existing spousal support orders, the tax structure remains unchanged for now.

Potential Negatives to the New Law

There is cause for concern that the new tax law will cause some breakdown in negotiations for spousal support payments. Spouses who will lose this deduction are more likely to argue for lower payment awards and fight the awards more than someone who was receiving some tax benefits for payments made. This can impact the receiving spouse who may be subject to added litigation they cannot afford. They could be put in a position where accepting a lowball offer seems like the only option because they cannot afford the legal costs required to fight their spouse in court.

On the flip side, spouses who may receive alimony are likely to want to delay active divorce cases. By prolonging a pending divorce matter, it could push it into the 2019 calendar, making the final settlement subject to the new laws. For the spouse receiving alimony, this means they are getting the money free and clear, with no need to claim it as income on federal income tax returns.

In general, the looming tax law is likely to make divorces even more contentious and complex through the end of the year.

Time is of the Essence

If you’re contemplating a divorce, or you’re currently in the middle of a pending case, it is absolutely imperative to fast track the settlement process as much as possible if you’re concerned about the case running into 2019. Even couples who are not fighting over every little detail may be at risk for running over. For example, if you submit your paperwork on December 1st and the judge orders a continuance or schedules a hearing, it may not be heard until January.

It’s important to retain a qualified Boca Raton family law attorney who is well-versed in divorce matters, especially drafting alimony agreements and settlements. Our team at Schwartz | White have years of experience handling even the most complex family law matters. Contact our office at 561-391-9943 today to schedule a consultation.

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