Changes Directly Affecting Family Law
I was sent this article from Jeremy Salvador, which I thought it would be nice to share on our site.
The bill, called the “Tax Cuts and Jobs Act,” will certainly be subject to many changes prior to the House acting on it over the next several weeks. But one of its key provisions of is the elimination of most itemized deductions – which would include the elimination of the deduction for alimony paid as well as the deduction for legal and accounting fees incurred to receive alimony. This is a penalty, if you will, on the family law.
Presumably, under this bill, alimony would be treated similarly to child support from a taxation perspective – that is, nontaxable to the recipient and nondeductible to the payor. But at this point we are not sure. Alternatively, if the bill results in alimony being taxable income to the recipient without a deduction to the payor, this could spell disaster.
Looking to the Future
Naturally, the passage of this bill could fundamentally transform discussions regarding support. So how can we, as a community, prepare ourselves for what’s to come?
1) Contact your House Representative and express your concerns: https://www.house.gov/representatives/find/
2) Consider whether the passage of the tax bill constitutes a change of circumstances.
3) Determine whether there is a material difference in net spendable income under the new proposed tax laws.
To assist, I’ve included a table to give you a perspective of the difference between monthly taxable spousal support and non-taxable spousal support at various levels. Each row represents the same amount of net spendable income to the recipient.
|(Computed using 2017 tax rates – which may be subject to change under the bill)|
Here’s a summary of the other main components of the tax proposal:
This article was written by aaadivbk