Alimony Payments and New Federal Tax Rules
Updated: Oct 17, 2022
As the end of the year approaches it’s those concerned over their alimony payments may need to come to settlement before the new tax rules enacted in 2019. According to an article.
Per the article, the tax laws now allow for a settlement where it is possible to make a arger payments to the receiving spouse and receive tax benefits after the facts. The new tax rules prevent deductions for alimony from the paying spouse. The old treatment is in effect for those final support orders completed in 2018.
Under the old rules it was a win win for both the payor and payee spouse. The payor spouse could receive a tax break through a reduction in their gross income. If they are in the 39% tax bracket they pay that percentage at the reduced income. The payee spouse alternatively if they are in the 20% bracket would only pay taxes on the 20% on the alimony received. Those factors are no longer possible under the tax rules.
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