Alimony deduction may be on the chopping block

by | Nov 13, 2017 | Alimony |

One part of the proposed tax reform legislation that may impact some people in California is the proposal to do away with the alimony deduction. Under this proposal, people who are ordered to pay alimony to their ex-spouses would no longer be able to claim their payments as deductions on their taxes.

Under the Tax Cuts and Jobs Act, payers would no longer be able to claim an alimony deduction after 2017. While this may ostensibly hurt them, it would also harm the recipients as well. Since the payers are normally in a higher tax bracket than the recipients, those who are paying alimony are actually paying less than what is ordered since they are able to deduct the payments on their taxes.

If the alimony deduction is taken away, then the payers will simply have less money available to them to make their alimony payments. This means that the recipients of alimony may also get less. Courts take the deductibility of alimony into account when they issue alimony orders. If there are changes in the tax law, the courts are likely to order lower amounts.

People who have been married for lengthy periods and who have large disparities in their incomes might expect that alimony may be an issue in their divorces. They might want to consult with experienced family law attorneys to learn what they might expect. The lawyers may keep abreast with the potential changes in the tax code and make arguments for lower alimony amounts if the deduction is taken away by the federal government. They may also work to negotiate agreements that define the amount of any spousal support and the duration of it in order to provide the maximum protection for their clients.