Knowledge Base

Reminder: Window Closing for Deducting Alimony

June 1, 2018

By Lynne C. Halem

Beginning in 2019, alimony will no longer be deductible to the paying party or taxable to the recipient party.  However, all couples divorced by December 31, 2018, will be grandfathered under the “old“ Alimony Tax law.  Still there is confusion as to which couples will actually qualify to follow the “old” tax law. 

Without doubt we know that:

  1. Couples who are already divorced will follow the “old” Alimony Tax law unless they file for a modification and agree to follow the “new” Alimony law.
  2. Couples whose divorce will be finalized by December 31, 2018, will follow the “old” Alimony Tax law. This means that couples that are filing a No-Fault petition for divorce in Massachusetts need to allow for the 120-day wait period, thereby requiring a court appearance by late August 2018.

However, and the however is a “big deal,” some tax commentators believe that those who are eligible to follow the “old” Alimony Tax law constitute a much larger group than I have indicated above, including:

  1. Couples who appear before a judge for approval of their petition to divorce by December 31, 2018, even if their divorce has not been finalized.
  2. Couples who have executed a separation instrument by December 31, 2018, including those who have not yet been to court.

With no consensus on which couples actually comprise the divorcing population eligible to follow “old” tax law, confusion reigns.

All the “what ifs,” and “maybes” do little to help families that are already bewildered by the very notion of divorce, let alone whether or not to interject tax contingencies into their discussions of settlement.  Taxes of course, should not be the guiding force in determining when and how a couple approaches divorce.  However, knowledge is important and in that vein, we want to make sure that divorcing couples are aware that changing tax laws are a reality.  

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