Alimony Deduction: No Rush to a 2017 Final Judgment - PSWH
While the House Tax Reform Bill provided for the elimination of the alimony deduction in divorces as of January 1, 2018, a last minute change in the final ”compromise” House-Senate Bill instead eliminates the deduction effective 2019. That is, alimony will no longer be deductible to the payor, nor includable as income to the payee, in divorces entered in 2019 and thereafter.
The original bill and the 2018 deadline had litigants and matrimonial attorneys nationwide rushing to enter final Judgments of Divorce in the final weeks of 2017 to preserve the deduction in pending matters. The modification from 2018 to 2019 now gives litigants and lawyers alike time to consider the tax change and more properly plan for the loss of the deduction. The revised timeline is particularly important in cases where parties in pending matters have negotiated alimony obligations assuming the income would be includible to the payee and deductible to the payor.
The House and Senate have passed the revised bill and news sources report that President Trump may sign it into law as early as next week.
If you would like additional information on this topic, please contact Tracy Julian at tjullian@pashmanstein.com.
Disclaimer by Pashman Stein Walder Hayden, P.C.: This article is for informational purposes only and is not offered as legal advice regarding any particular matter. No reader should act on the basis of this publication without seeking appropriate professional advice. Before making your choice of attorney, you should give this matter careful thought. The selection of an attorney is an important decision.