Changing alimony rules may affect the way that people in Florida decide to divorce. In late 2017, Congress passed the Tax Cuts and Jobs Act. One of the most significant aspects of the law is how it changes the way taxes treat spousal support. While the law was passed in 2017, the alimony changes do not go into effect until January 1, 2019. This caused many people to escalate their timelines and finalize their divorces in 2018 under the existing rules.
However, couples who decide to end their marriages now will be working with the new rules in the new year. The law does not apply to divorce agreements that are already finalized, but it will apply to all dissolutions finalized after the end of 2018. For decades, people who pay alimony to their former spouses have been able to claim the amount paid as a tax deduction. For wealthy people with a significant amount of income, this deduction could be considerable. On the other hand, the recipient of the funds would pay taxes at his or her lower income tax bracket.
This provided a strong incentive for people to reach an agreement in their divorce that included generous alimony provisions. The new approach reverses this entirely. Payers will no longer receive a tax deduction for their spousal support payments, and recipients will take the income tax-free. While this may seem a boon to recipients, many warn that it will make divorces more complex and reduce the overall amount of alimony payments.
When people decide to divorce, the financial effects of ending their marriage may last long after the practical and emotional issues have been handled. An attorney who practices family law can help a divorcing person understand the changing laws and reach a fair settlement on issues like property division and spousal support.