Alimony payments are often a useful way to help stay-at-home wives and husbands in California get back on their feet after a divorce. Alimony allows them to take time to acquire the skills they need to get a job to pay the bills now that they are single. The newly enacted tax law may have a major impact on men and women who are receiving alimony payments. According to one of the provisions, there will be no more tax deduction for alimony payments for people getting divorced after December 31, 2018. This means that the spouse who is paying alimony will not be able to deduct it on their taxes and the spouse receiving it will no longer be taxed.
Divorce experts worry that this change may make it more difficult to settle divorces. As things are now, both spouses are able to afford living costs as newly single people. With this change, that may no longer be the case. Higher-earning spouses may not pay their ex-spouses as much as they would have in the past, which could make it difficult for the lesser-earning spouse to support themselves.
According to the Census Bureau, almost 250,000 people received alimony last year. In 2015, taxpayers paid close to $9.6 billion in alimony. This does not include child support payments, which over 4.3 million people received last year.
While there are some people against this change, many believe that the change will provide financial help to divorcing spouses. Only time will tell if this change will be a positive or negative for divorcing couples all across the country.
Source: USA Today, “Exes and taxes: How the tax overhaul would alter alimony,” Jennifer Peltz, Dec. 24, 2017