By now, we have all heard bits and pieces of the sweeping tax plan proposed by Republican lawmakers. Interestingly, there is a significant provision that will affect divorcing couples. Whereas current tax law allows the payor spouse to deduct alimony payments and requires the payee spouse to pay taxes on alimony received, the proposed tax plan would eliminate the deduction to the payor and the taxability to the payee. In effect, the payor spouse would pay alimony with after-tax dollars. This provision would raise tax revenue in order to pay for other tax cuts. If the tax plan passes as proposed, the repeal of deduction for alimony payments would be effective for any divorce decree or separation agreement executed after 2017. This article provides examples of the effect on a divorcing couple.
Tag Archives: taxes
The Republican Tax Plan Imposes a New Divorce Penalty
5 Money Questions You Should Ask Before Getting Married
Spring and summer are popular seasons for weddings so many of us will be celebrating in the near future. By now, the engaged couple has learned a lot about each other- where they grew up and went to school, who the important people are in their lives, what their hopes are for the future, etc. All of these facts are important but knowing each other’s financial past and present should also be a top priority as described in this article. Openly discussing topics, such as debt, taxes, and prior marriages, will lay a foundation for mutual understanding of individual and joint financial goals.
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Samalin Divorce Finance helps clients analyze their options.