What to Know About Tax Reform and Alimony
The implications of the Tax Reform Law would affect almost every aspect of American living, including divorce. Alimony, for instance, is set to change under the new ruling. It is typically the higher-earning spouse which pays the alimony ; this difference in tax brackets provides benefits to both parties, especially to the recipient. Under the previous law, an ex-spouse who pays spousal support is legally allowed to deduct the payment from his/her taxes, while the ex-spouse who receives the money has to include this in his/her taxable income. This deduction from the payer’s taxes is said to contribute significantly to the agreement of providing alimony to the payee. However, under the new law, alimony will no longer be deducted from the payer and the payee will no longer be paying taxes on it . The concern is in the amount of alimony that the payer can provide, since his/her ability to pay can be limited by tax concerns, given other expenses such as child support . As