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Tax law changes affect alimony after 2019

Spouses in North Carolina considering divorce may wish to learn about the impact of the Tax Cuts and Jobs Act on their future plans for spousal support and alimony. In the past, the recipient paid taxes on the alimony while the payer could deduct the sum. This situation will be reversed for newly concluded divorces starting in 2019.

How the new tax bill affects alimony

The Republican tax bill, which was signed into law in December 2017, will affect alimony payments for people in North Carolina and throughout the country who get divorced in 2019 or later. Under the old tax laws, the person who pays alimony does not pay tax on the amount; however, the ex who receives alimony does. The new law says alimony will not be tax-deductible for the payee, and the recipient will no longer have to pay taxes on it.

Changes in law could affect alimony amounts

North Carolina residents that are considering divorce and might need to negotiate alimony might be affected by a proposed change in the law that could affect payment amounts. The changes relate to the provision that allows those who pay alimony to claim the amount as a deduction while the receivers must include it as income.

Support issues after a divorce

North Carolina couples who are ending their marriage often have to make difficult decisions about asset division and ongoing maintenance payments. These issues can become even more challenging if they have children.

Rules for tax-deductible alimony payments

When North Carolina couples get a divorce, one person may be obligated to pay alimony. Usually, the recipient must pay taxes on the alimony while the payer can deduct it from taxes. However, there are several provisions that must be in place before this deduction will be allowed. The people must be in separate households, the payment must be one that does not continue after the death of the recipient and the agreement must not specify that the alimony is not deductible or taxable. In 2017, the U.S. Tax Court also found that if the amount claimed as alimony is not specifically mentioned in the legal divorce or separation agreement, it cannot be deducted.

Alimony and taxes: Can I deduct my alimony payments?

If you're paying a significant amount of alimony to your ex-spouse each month, you're probably wondering what tax benefits you might be able to receive. After all, the income that you're sending to your spouse is not income that you're directly benefiting from. Shouldn't your ex be responsible for paying income taxes on the money and not you?

Will alimony be part of your divorce? Maybe

As you are preparing for divorce, you may be wondering if you will have to pay your future ex-wife alimony in addition to child support. Unfortunately, divorce is rarely a clean break. Very often, couples will always have some sort of relationship after divorce, especially when support payments are involved.

Is there an alternative to monthly alimony payments?

Monthly alimony payments represent a significant financial strain for the individual required to make them. Some spouses try to avoid the prospects of having this monthly obligation out of the fear that they may not be able to make the payments on time, which could land them in contempt of court or in breach of a divorce agreement resulting in serious financial and legal consequences. Fortunately, there is an alternative to monthly alimony payments.

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Hardin Law Firm PLLC

Hardin Law Firm PLLC
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Fayetteville, NC 28305

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