Updated: Aug 31, 2019
Effective January 1, 2019 Alimony in all new qualified settlement agreements and court orders will be non-taxable - that is, not taxable income to the recipient, and not deductible to the payer.
You have one short month to prepare an agreement and or court order that may be structured to be either taxable or non-taxable.
Why it Matters
Between now and then, agreements and court orders may be structured to be either taxable or non-taxable. You may want to see the impact on taxes and after-tax income for three reasons:
1. Current agreements You want to decide whether to get your agreements signed before January 1.
2. Modified agreements For 2018 (and earlier) agreements modified after 2018 you can decide to opt in to non-taxable treatment.
3. 2019 agreements For agreements on or after January 1, you may wish to adjust spousal support to reflect the new tax reality.
One of the other things you can compare is the impact of who claims the exemptions.
This is still important, because the claim of exemptions determines who gets to claim the child tax credit.
With the changes in the current tax act, the child tax credit is more important that ever.
Find out the impact described above, and the impact on after-tax cash.
Changes in tax law is something you want to be aware of. Individuals who can assist you with your particular situation is a Family Law Attorney or Family Mediator. Both have specialized programs such as Family Law Software. Of course you should always consult with your accountant.
If we can be of assistance, please give us a call at 954-946-4774 . The Divorce & Mediation Center, Inc.