A new federal tax law was passed regarding federal income tax. It has been commonly referred to as the tax cut bill. How will it affect your Orlando, Florida Divorce Case? The new tax code will render alimony non-deductible effective January 1, 2019. That means effective January 1, 2019, the payor spouse will no longer be able to deduct alimony payments on his/her federal income taxes. The alimony payments that he/she pays to the payee spouse will no longer be deductible. That means, if you have a current dissolution of marriage case pending and you will have to pay alimony, you want to have a court order signed and entered by December 31, 2018. Better yet, you want your final judgment signed and entered by December 31, 2018. If not, you will not be able to deduct the alimony payments on your federal income tax return The payor spouse tax deduction is gone effective January 1, 2019.
The new tax code will also apply to alimony modifications after 2018 unless there is an agreement/order entered in 2018 stating that existing tax code will apply.
Therefore, it is necessary to include language in your marital settlement agreement that the tax cut and job act of 2017 does not apply to any modifications of this agreement or any order adopting it including any future agreement or orders modifying the alimony provisions set forth herein. The existing tax code at the time of signing this agreement will apply.
If you are currently deducting alimony and think there is a possibility of either you or your spouse filing a modification of alimony, you may want to speak to an attorney regarding a stipulation that any future modifications of your alimony will apply the tax code in effect at time of signing the stipulation; and that the tax act of 2017 does not apply to modifications. Make sure you get a court order signed and entered regarding this prior to December 31, 2018.
Talk to your CPA and see what he/she says regarding how and what you can do to protect the deductibility of your alimony. Then, see an Orlando attorney to help you accomplish saving your tax deductibility on alimony in the event of a modification.
If you have more questions regarding a Marital and Family Law matter, you may call Ann Marie Giordano Gilden at Ann Marie Giordano Gilden, P.A. at 407-732-7620 and set an initial consultation.
This article is for informational purposes only, and it does not form an attorney-client privilege.