On behalf of Stange Law Firm, PC posted in divorce on Saturday, March 2, 2019.
This tax season is the first year that residents in Illinois will be filing returns based on a majorly revised tax code. The new Tax Cuts and Jobs Act has taken full effect and for divorcing or divorced couples, this law has ushered in some significant changes that you should be aware of.
As explained by MarketWatch, taxation for spousal support payments is getting a lot of attention these days. Historically, the person who received alimony was required to claim the money as income on their federal tax return. This meant that they were solely responsible for the income tax payments on those funds. In addition, the person who was ordered to pay alimony was able to deduct the amount from their return. This deduction often softened the blow for people required to pay spousal support.
Now, however, the tables have turned and it is the paying spouse who much also accept tax liability for the money. This change affects not only any newly completed divorce agreements but also applies to divorce decrees completed prior to 2019 that are amended in 2019 or beyond. The change in how alimony is taxed may well make you and your spouse review other options for how to structure your divorce agreement.
If you want to learn more about how the recent changes to the tax laws may impact you financially if you make or amend an agreement to pay or receive alimony, please feel free to visit the spousal support information page of our Illinois family law and divorce website.
