I'm getting a divorce...now what?
Did You Know?
Divorce or separation may have an effect on taxes?!
Taxpayers should be aware of tax law changes related to alimony and separation payments. These payments are made after a divorce or separation. The Tax Cuts and Jobs Act changed the rules around them, which will affect certain taxpayers when they file their 2019 tax returns next year.
The law relates to payments under a divorce or separation agreement. This includes:
In general, the taxpayer who makes payments to a spouse or former spouse can deduct it on their tax return. The taxpayer who receives the payments is required to include it in their income.
Beginning Jan. 1, 2019, alimony or separate maintenance payments are not deductible from the income of the payer spouse, or includable in the income of the receiving spouse, if made under a divorce or separation agreement executed after Dec. 31, 2018.
If an agreement was executed on or before Dec. 31, 2018 and then modified after that date, the new law also applies. The new law applies if the modification does these two things:
It changes the terms of the alimony or separate maintenance payments. It specifically says that alimony or separate maintenance payments are not deductible by the payer spouse or includable in the income of the receiving spouse.
Agreements executed on or before Dec. 31, 2018 follow the previous rules. If an agreement was modified after that date, the agreement still follows the previous law as long as the modifications don’t do what’s described above.
If any of these situations apply to you and you find yourself confused and overwhelmed in the midst of an already stressful situation, relax with Distinct Tax! Give us a call or send us a message to schedule your consultation today! We understand that you may have 99 problems at the moment, but we can help insure that the IRS isn't one!