The Tax Cuts and Jobs Act signed into law this past December is arguable the most significant revision of the Internal Revenue Code since 1986 and changes the tax treatment of alimony.
Prior to the new law, alimony was tax-deductible for the paying spouse and taxable income to the receiving spouse. Starting in 2019 alimony becomes tax neutral - or nondeductible to the payor and tax-free to the recipient - much like the tax treatment of child support. However, divorce or separation agreements executed prior to 2019 (including subsequent modifications) will preserve the old tax treatment. Subsequent modifications made in later years will preserve the old tax treatment unless the parties mutually agree to apply the new law.
Learn more about Tax Planning Under the Tax Cuts and Jobs Act.
This article was originally published in Besthesda Magazine's March/April 2018 edition.
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