When a Florida couple decides to part ways, they must deal with various issues. These issues include property division, child custody, child support and alimony. Most of these affect a divorcing spouse’s finances, as well as the taxes they have to pay. For instance, per the guidelines of the Internal Revenue Service, child support is never tax deductible and isn’t considered income; however, alimony payments do have an effect on a person’s tax obligations. Now, changes under the Tax Cuts and Jobs Act have made solving disputes just a bit more complicated.
According to the new law, alimony and separate maintenance payments are no longer deductible for any divorce or separation agreement executed after December 31, 2018, or for any divorce or separation agreement modified after that date. So, for 2019, alimony payments will not be deductible for the paying spouse and will not be included in the income of the receiving spouse.
If alimony is paid in cash and the spouses do not file a combined income tax return, then the alimony can be counted for tax purposes. Moreover, the payer and the receiver cannot reside in the same household. At the same time, the spousal support order must clearly state that the amount being paid is alimony and not for property settlement or child support. Another important point to remember is that any payments made by one spouse to another apart from those mentioned in the court’s order are not considered alimony, per federal taxation rules.
If you are planning to file for a divorce, you should consult a legal professional to make sure that you and your partner understand the new law regarding taxes and alimony.