When couples get
divorced in Florida and in other states throughout the country, it is not uncommon
for the spouse who earns less money to request spousal support, also known as
alimony or maintenance. Alimony is a form of financial assistance that is paid
by one spouse to another.
While many couples do not have equal earning capacities, one spouse may
not even have an income in some cases. In the event of a divorce, maintenance
payments help to keep the spouse with less earning potential financially
stable. Spouses who are required to pay alimony typically do not mind
because, under current law, these payments are deductible to the payer.
Unfortunately, alimony deductions will be a thing of the past according
to the new tax law. According to the new law, the spouse paying alimony
cannot deduct it, and the spouse receiving the money no longer has to
pay taxes on it.
The provision would take effect for divorce and separation agreements signed
after December 31, 2018. Furthermore, the new rule wouldn’t affect
anyone already paying alimony.
Divorce lawyers throughout the nation say this move could make ending marriages
an even lengthier and more costly process. Attorneys typically use this
tax deduction as a means to reach a settlement easier—since there
was more money in the pot to be able to divide. Without the deduction,
there is less money to go around.
Spillover implications of eliminating the alimony tax include complicating how
child support is calculated. The change can also affect how assets are split up.
Additionally, the move could be particularly harmful to lower-income couples.
While wealthy couples can often afford higher taxes on alimony payments,
it is those spouses with limited means where a few hundred dollars per
month is going to make a significant difference in their quality of life.
Prenuptial—and postnuptial—agreements generally contain clauses
that outline what spousal support would look like should the couple get
divorced. However, these agreements have alimony provisions which assume
the tax deduction will be in place.
If you are interested in filing for divorce in Florida,
schedule a consultation with our Daytona Beach family law attorney at
Stepniak & Park today.
Contact us for more information about the new tax law.