Wednesday, August 8, 2018
One aspect of the changes to the tax code brought about by the Trump administration is set to take effect on January 1, 2019, with the end of the alimony deduction. The alimony deduction has been particularly beneficial for wealthy individuals, who can often significantly reduce their tax bill by making alimony payments to a former spouse. This will no longer be the case, and the person receiving the alimony will no longer have to pay taxes on the money they receive.
Some lawyers and financial advisors are telling clients who may be contemplating a divorce that if they want to take advantage of the alimony deduction, they should act now. Though not all divorces can be settled amicably or without some form if litigation, the tax incentive for the ex-spouses may make things easier.
Most experts say that individuals who are already divorced have nothing to worry about. But any Americans who are considering a divorce should think carefully about their next steps and consult their financial advisors about what these tax changes mean for them.
See Elizabeth Carson, Why Some Wealthy Americans May be Thinking About Getting a Divorce Before the End of This Year - Thanks to Donald Trump, Lexology, August 6, 2018.