GeoffT

No tax deduction on alimony payments

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In case you're not aware, one of the lesser known items in the proposed GOP tax reform is eliminating the tax deduction for alimony payments and making it tax-free to the recipient to be effective beginning in 2018   

 

I'm going through a divorce right now and will have to pay monthly alimony to my soon-to-be-ex.  I was counting on the tax deduction so I'm not liking the sound of this.  My lawyer is looking to see if we can finalize our divorce by the end of the year.  If we can't then she will be looking to reduce the monthly alimony payment to make up for the loss of the tax deduction.    From all accounts I've read, if this passes it will make divorce more expensive and hurts both parties.

 

Thoughts?

 

 

 

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ha. good luck on getting your ex's attorney to agree on reducing your payments due to loss of tax credit. :dismay:

 

fiscally this is a disincentive to ever get married.

 

prenups are worthless too unless your spouse to be attests that they got independent legal counsel prior to signing and even then, in most states your earnings and gifts received during the marriage are community property.

 

as you can guess, this hits the Red States harder.

 

I just found out recently that contested divorces still take up five years if you miss hearings, fail to show up on time etc.

 

that's  how you avoid five years of Alimony, lol

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I think one of the unintended consequences of this proposal is there will be less money to give to the payee.   Because if the payor can't deduct the alimony payments, there will be more incentive to pay less. Plus, it puts the payor in a higher tax bracket, meaning less money to spread around for both sides.    Most family law judges award alimony based on the tax factor.   I wouldn't be surprised if they become more inclined to award less money if the tax deduction is taken away.

Edited by GeoffT

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Sorry about the big D.

 

I think the goal is to simplify the tax code by upping the standard deduction and eliminating as many itemizable deductions as possible. One might ask why should the taxpayer subsidize a divorce? If it results in less alimony paid (which I have serious doubts about) then let the bitch get a job.  :D

 

I guess how I feel is it doesn't affect me. Unlike the 401k reductions they've been hinting at. THAT would piss me off.  

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3 mins ago, HugeDinghy said:

any chance it will blow over..i know you have said that your wife goes through down spells...my word not yours...

Not a chance in hell.    I'm ok though.  I look forward to having more freedom and less BS in my life.

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