Berman & Asbel, LLP

How Proposed Tax Reforms Could Affect Alimony

Alimony tax deductions could disappear under the House of Representative's recent tax reform plan. Currently, individuals who pay alimony receive a tax deduction, and those who receive it must include it as income on their tax returns.

Under the House's bill:

  1. Individuals paying alimony would no longer be able to claim it as a tax deduction and may be inclined to seek lower payments.
  2. Individuals receiving alimony would not need to include alimony as taxable income.

Many divorcing spouses include the tax deduction in their alimony negotiations. If the tax reform passes, Pennsylvanians and people across the U.S. could see significant declines in alimony awards and amounts.

What This Means For Individuals Currently Going Through Divorce

The Tax Cuts and Jobs Act is currently in a proposed status; the bill, or the alimony provision, may not be successful. However, it is important to understand the changes that could be coming to alimony laws in order to prepare yourself and your case accordingly.

For instance, if you are delaying discussions about alimony until after the holidays, you might want to revisit your timeline. The bill states that it "would be effective for any divorce decree, separation agreement [or alimony modification] executed after 2017."

If you have questions regarding alimony or other family legal issues, it would be wise to consult an experienced family law attorney who is familiar with family laws and procedures.

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