Within the last year, U.S. tax law has changed dramatically.
These changes impact how taxes are paid on alimony after a divorce and who pays them. Consider how these changes affect your situation, especially if you’re thinking about having your divorce decree modified under the new laws. Your divorce settlement may require renegotiation for a variety of reasons including shifts in medical, psychological, or economics. Here’s what you should know.
What is the Tax Cuts and Jobs Act?
The Tax Cuts and Jobs Act is a new tax plan under the President Trump administration that makes several changes to U.S. tax law. The Act went into effect on January 1st, 2019. The new laws attempt to make filing taxes easier for most people, and will allegedly reduce the time it takes for the IRS to process tax returns by 4-7%. Among the changes include how itemized deductions, child tax credits, and alternative minimum taxes are done.
How Does the Tax Cuts and Jobs Act Affect Alimony in New York?
Which party held responsible for paying taxes on alimony has changed with the new provisions in the Tax Cuts and Jobs Act. Essentially, the tax burden has been lifted from the recipient and has shifted upon the payor.
How Alimony Was Taxed Prior to 2019
Before January 1, 2019, the recipient was responsible for paying taxes on alimony. The recipient was required to claim alimony as taxable income, while the payer was able to take a deduction on the alimony paid.
How Alimony is Taxed Now
Recipients no longer need to claim alimony as taxable income. Instead, payers are no longer allowed to take out a deduction for the amount of alimony paid to the recipient over the course of the year, moving the tax responsibility to them.
Do New Tax Laws Affect Child Support?
These new tax laws do not affect how child support is taxed in New York. Child support continues to be tax neutral, meaning that neither the payer or the recipient pays taxes on the money.
Contact a Brooklyn Divorce Lawyer Today for Help
If you are considering filing for a divorce or modifying an existing divorce decree, you should understand how tax laws may or may not affect your circumstances. Tax law is difficult enough to comprehend and combining it with divorce law can make things even more complex. Work with an experienced New York divorce attorney to learn more about how the Tax Cuts and Jobs Act affects you. Call Brooklyn Divorce Lawyer Mary Katherine Brown today for a consultation at (718) 878-6886.Posted in : Divorce ,