If you expect to be paying alimony to an ex-spouse in the near future, or are currently paying alimony and are looking to modify your existing agreement, Congress’ recently passed tax reform bill has a word of advice for you: Act fast or lose deductibility!
Under previous conditions, any spouse paying alimony could deduct it from their taxes, while the recipient paid income taxes on the sum.
The recent overhaul dictates that all new orders and agreements for alimony payments filed after Dec. 31, 2018 will no longer be deductible, and ex-spouses will no longer have to pay taxes on the money.
Existing agreements will not be affected.
But here’s the caveat: beginning Jan. 1, 2019, any modification made to an agreement will be classified as “new,” and therefore be considered non-deductible.
Because of this, 2018 is poised to become the year of the alimony adjustment. These should be filed well in advance, preferably within the first quarter of the year.
This cannot be stressed enough – because a final order must be entered by the Clerk of the Court prior to the Dec. 31, 2018 cutoff, time is of the essence!
If you are entering into an alimony agreement, or are looking to modify, contact a highly experienced divorce attorney as soon as possible.
Our firm’s lawyers understand the impact that alimony can have on the lives of both ex-spouses after divorce.
Call Milstein Siegel at (410) 792-2300 or fill out the form to find out how we can help.