How the New Tax Bill Could Affect Alimony
A new federal tax bill was introduced last week, and it was a large one filled with multiple proposals that people weren’t necessarily expecting. Despite this, it is those proposals that could have the biggest impact on the lives of everyday citizens. One group of people who could be facing a hardship are those who pay alimony.
As tax laws currently stand, anyone who pays alimony to an ex-spouse is able to write up those payments as a deductible expense once tax time rolls around. The new tax bill eliminates that deduction. On the flip side, the person receiving the payments will no longer have to pay taxes on those payments. If the bill becomes law, the changes will occur for any separation or divorce agreement that was executed after 2017. The changes would also apply to any divorce or separation agreement that was adjusted after 2017.
These changes may not be burdensome to some people after a divorce, but they could mean major changes in the way others handle their finances. Other changes on the horizon include the loss of student loan interest deduction, the elimination of the deduction for relocation expenses, and the counting as taxable income for employer-paid tuition for continuing education.
Keep a close eye on this bill, because you may just find yourself having to make some changes in your budget come next year.
If you need assistance with divorce, alimony or child support in Columbia, MD, reach out to our office by calling (410)553-5042. We will help you schedule a case evaluation and advise you of your legal options. Reach out to us today or browse our website for more information about our firm and the types of cases we handle.