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Changes to the tax law may affect alimony payments in divorce

Divorces in New York are generally not an easy process. Some divorces are much more amicable than others, but oftentimes there are disputes which must be addressed during the divorce. There are number of issues which can cause these disputes. People may have different opinions on child custody or visitation. They could also have issues with dividing their assets, especially if it is a high asset divorce. Another issue which also arises in high asset divorces and can cause disputes is alimony.

Alimony is usually paid when one spouse earned significantly more than the other during the marriage the other spouse needs additional money after the divorce to continue paying the bills and living their life. There is not a calculator to determine the amount or duration of alimony or whether it should be paid at all. The paying spouse also generally does not want to keep supporting the other spouse after the divorce. As one can imagine, all these factors can lead to disagreements on this issue.

To help ease some of the burden on the paying spouse, under the current tax law the paying spouse can deduct alimony payments from their taxable income and the receiving spouse must include it in their income each year. This will change under the new tax law. Alimony payments will no longer be tax deductible for the paying spouse. It is unclear how much of an effect this will have on alimony determinations in the future, but most predict it will lead to even more disagreements.

Many people in New York are divorced and many more will divorce in the future. Not everyone will be required to pay alimony, but those who are will be forced to follow the new tax law and will not be able to deduct these payments from their taxable income.

Source: www.cnbc.com, "Loss of alimony tax break in GOP bill may add to the financial pain of divorce" Annie Nova, Feb. 4, 2018

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