Saturday, September 1, 2018
Over 600,000 taxpayers claimed a deduction for alimony on their 2015 returns, but for divorces entered into after 2018, alimony will no longer be deductible by the payor and the income will not be taxed to the recipient, thanks to the Tax Cuts and Jobs Act.
“The law has gone back almost 80 years,” said Marilyn Chinitz, a partner at law firm Blank Rome who specializes in matrimonial litigation involving high-net-worth individuals.
“The Revenue Act of 1942 made alimony payments deductible to the paying spouse and taxable to the recipient,” observed Chinitz, who counts Tom Cruise and Michael Douglas among the clients she has represented in divorce litigation. “But that’s all changed. Now, everyone is racing to get their divorce done before 2019. It can be problematic if the divorce is settled after 2018 because one spouse will lose a benefit and the other spouse will gain. If a case is close to settling, you would hope to close it out before the end of the year.”
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