The Tax Cuts and Jobs Act of 2017 signed into law last month will change the tax treatment of alimony payments for couples divorcing after December 31, 2018.
Currently, the payor of alimony deducts spousal maintenance payments from their taxes and the recipient claims the amount received as income.
The arrangement, as it stands, benefits a higher earning spouse by providing a tax break and, if the recipient is in a lower tax bracket as is typically the case, the additional income will be of little consequence in the tax department.
By taking alimony as a deduction with payments going to a less moneyed ex, divorced couples and their children have been able to keep more of their money in the family unit so to speak. With the passage of the new law, Uncle Sam will stand to benefit instead.
The new law will more than likely affect future divorce negotiations. Spouses required to pay alimony may want to reduce payments by the amount of the lost deduction and the windfall the recipient will receive from a tax free payment.
Again, the law goes into effect after December 31, 2018 so no worries for those divorced prior to that date unless they wish to specifically incorporate it into their existing divorce decree. However, divorced couples who chose to modify court ordered spousal maintenance after December 31, 2018 will likely be subject to the new provisions like it or not.
Questions on Illinois Spousal Maintenance?
Contact Lake County Illinois Alimony Attorneys for Help
If you have questions regarding Illinois spousal maintenance or any other family law questions, contact the Lake county Illinois Family Law attorneys of Schlesinger & Strauss LLC for more information at 847-680-4970.