Practicing in White Plains, New York, Gordon Burrows offers knowledgeable representation in complex family and matrimonial cases. Gordon Burrows maintains an extensive knowledge of divorce law and alimony arrangements. As reported in the New York Post, one provision in the Congress’ recently passed tax overhaul could have a significant ramification for those going through divorce.
A provision in the bill stipulates that spouses in divorces commenced from January 1, 2019, onward can no longer deduct their alimony payments. Balancing this somewhat, the alimony recipient is no longer required to pay taxes on the alimony received.
The overall effect is to decrease the total amount of money allocated between spouses, as the ex-spouse responsible for paying alimony typically has a higher income and a corresponding higher tax bracket. Thus, the tax savings that the recipient receives are significantly less than the extra money that the alimony payer owes in taxes.
Some worry that this extra tax will have a significant impact on those who are in lower income brackets and for whom extra outlays represent a major financial burden. The impact on the federal government is expected to be a net positive over the next decade, with the IRS adding $8.3 billion to its coffers.