Everyone is talking about the new tax law set to take effect on Jan. 1, 2018. While there are some positive things being said about it, most people do not believe it will work to help the average American. Only time will tell. One thing that may affect you if you plan to file for divorce in the coming year or years, whether in Arizona or elsewhere, is that alimony will no longer be a deductible expense.
Does this really matter? Who cares if alimony is tax deductible? Well, anyone who has to pay it cares. By taking away the deduction benefit, those paying alimony will end up losing even more out of pocket every year.
2017 tax law
Under the 2017 tax law, those paying alimony may deduct the expense if certain circumstances apply to their situations. These include:
- Spouses file separate tax returns
- Payment comes in some form of cash, including checks
- There is a support order in place
- Spouses live in separate households
So, payments made for the financial support of a child or as part of a property settlement do not qualify as tax deductible.
Will the new law affect those already paying spousal support?
No. The new law will only affect those who file for divorce starting after 2018. Those currently paying alimony will continue to enjoy the spousal support tax deduction — for now. Whether it will always be that way is unknown.
How will this affect the divorce process?
This law change could result in more fights about spousal maintenance which could increase the length of time it takes you to finalize the divorce process. You and your spouse will both want to walk away feeling that the settlement terms are fair. That is understandable. It just may take more time to reach agreeable terms that leave you both in good financial positions.
Fight for a fair spousal maintenance order
You may be left feeling that being forced to pay alimony leaves you somewhat at a disadvantage, and it just might if you are not careful. You can fight for a fair spousal maintenance order with the assistance of legal counsel. There may be other options available that would allow you to lower the amount you owe in support. Your legal counsel can help you review your situation and offer all possible solutions.