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Alimony is often considered a necessary evil when two parties arrive at the conclusion that they need a divorce. These payments are meant to ensure that both spouses are able to survive financially after the divorce has been finalized. How this affects taxes is commonly overlooked — but with recent changes to tax laws, it is essential that both parties understand what has changed.

Understanding Alimony

alimonyWhen the income of the spouses varies significantly, one spouse is considered “dependent” on the other. The “supporting spouse” is then obligated to provide financial support after the divorce, either in a lump sum or in ongoing payments. Generally speaking, a spouse is considered dependent if they don’t make a livable wage on their own.

The amount that a spouse is required to pay in alimony — as well as the duration of the alimony payments — will be based on a wide range of factors, including the duration of the marriage, separate property owned by each spouse, the education levels of both parties, and so on.

What’s Changed in the Tax Laws?

Alimony payments were previously tax deductible. This meant that all alimony payments made by a supporting spouse could be deducted from his or her tax responsibilities at the end of the year. Beginning January 1, 2019, however, alimony payments will no longer be tax deductible. On the other hand, those receiving alimony payments won’t have to report it as income.

This change to tax law benefits those receiving alimony, but can make taxes tougher for the payer. 

 

From figuring out alimony payments to negotiating child custody, the help of a divorce lawyer can streamline this emotionally trying experience. The Law Office and Mediation Center of Jeannine M. Talbot has served Litchfield County, CT, for over 20 years, helping parties mediate reasonable resolutions to divorce proceedings. To learn more about how she can help you or to schedule a consultation, visit her online or call (860) 482-9004.

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