This blog has previously discussed a change in how the federal tax code will treat alimony payments. Specifically, alimony will not be tax deductible for those who pay if the divorce order or agreement is executed after the end of this year.
The most immediate impact of this change will be that those who pay alimony will need to remember that, if their divorce is finalized after the end of this year, they will not receive any tax breaks. This means that there may be some advantage to getting any agreement regarding alimony finalized before the end of 2018.
According to some experts, another long-term impact on the change may mean that families have less money to go around. The change in tax treatment was meant to increase tax revenue, as those who benefit from the alimony deduction often pay tax at a higher rate and, thus, get greater value out of the deduction.
However, the idea behind the deduction was that it would ultimately benefit the entire family, even though the family maintained separate households. On a related point, some are concerned that as courts adjust to the new law, there will be a movement to reduce the current standard amounts of court-ordered alimony payments.
The bottom line is that many divorcing or separating couples are going to want to act promptly to set up alimony or at least consider if the option is right for them. They may do so with the help of an experienced family law attorney.