Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, January 30, 2018

Tax Law Brings Big Tax Changes For Alimony Payers

image from https://s3.amazonaws.com/feather-client-files-aviary-prod-us-east-1/2018-01-30/79c72644-a904-41e8-9769-ed0dd05bd609.pngUnder the freshly passed Tax Cuts and Jobs Act (TCJA), taxpayers supporting their ex-spouse via alimony payments will no longer be allowed to deduct those expenses. The spouse receiving alimony, on the other hand, is no longer required to report the support payments as ordinary income. Under prior law, a higher-earning ex-spouse paying alimony to a lower-income ex-spouse was able to take an ordinary tax deduction while the payee spouse had taxable ordinary income. David George, a California CPA, believes the change is part of an effort to raise revenue: “I believe that the reason for the change was as a money-raising effort, since usually the payer who gets the deduction currently is in a higher tax bracket than the recipient.” Martin Abo, a CPA in New Jersey, added: “[High-net-worth] clients now more than ever will want to consider prenuptial agreements to avoid potential litigation in the future – and it’s best to deal with this new alimony issue in such an agreement.”

See Jeff Stimpson, Tax Law Brings Big Tax Changes For Alimony Payers, Financial Advisor, January 22, 2018.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.



Current Events, Estate Planning - Generally, Income Tax, New Legislation | Permalink


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