A change in the new tax law will eliminate a tax break for alimony payments finalized after Dec. 31st. Up until now, alimony payers were able to deduct payments from their taxes while the receiver had to declare alimony as taxable income.
The IRS realized they were losing revenue from the payer side but gaining revenue from the receiver side. By eliminating the deduction and eliminating the requirement to report alimony as taxable income, the IRS will earn more revenue because the payer is typically in a higher tax bracket than the receiver.
If your divorce isn’t close to being finalized it’s probably unlikely you can do anything to speed up the deduction. However, there are changes made by the IRS every day. Most components within taxes are not a closed book if you’re looking for a solution to keep deducting payments after the new year, contact a member of our team to discuss strategies related to this change in the law.
