Its tax season once again and, starting Monday, the Internal Revenue Service is ready to process your tax return. As you prepare your 2019 taxes, there are changes to the tax treatment of spousal maintenance to keep in mind.
The Tax Cuts and Jobs Act enacted new tax rules regarding spousal support payments, also known as alimony, for divorces finalized after January 1, 2019. If you divorced last year, and have been ordered to make Illinois spousal maintenance payments the new tax rules apply, which do not allow payers of spousal maintenance to deduct the payments on their tax returns or the recipient spouse to claim payments as income.
Tax Treatment of Illinois Spousal Maintenance Then and Now
Prior to the new law going into effect, payors of Illinois spousal support, presumably higher earning spouses, were able to deduct spousal maintenance payments on their tax returns while the lesser earning spouse reported the payments as income.
Although this arrangement proved beneficial to the family as a whole, allowing them to keep more of their earnings within the family unit, as of January 1, 2019, Uncle Sam gets a bigger piece of the family pie by eliminating tax deductions for spousal maintenance paid.
Grandfathering of Tax Benefit for Spousal Maintenance Payments
Those who divorced prior to the new law taking effect are grandfathered under the old tax law and may continue to take the tax deduction. Those who modified spousal maintenance orders after the law took effect may or may not be subject to the new law as are any couples who divorced after January 1, 2019.
Contact an Experienced Spousal Maintenance Attorney for Help
When you have any questions regarding Illinois spousal maintenance, including under what circumstances you may seek an Illinois spousal maintenance modification, contact the Libertyville family law attorneys of Schlesinger & Strauss LLC for immediate assistance at 847-680-4970.