If you pay alimony, you may have seen news coverage in recent days and weeks, talking about how the new tax plan approved by the Republican House and Senate, and signed into law by President Trump, affects you. Both payors and recipients of alimony express concern about how the new tax laws on alimony may impact them and their families.
Currently, if you pay alimony, you probably know the IRS reduces, for tax purposes, your income by the amount of alimony you pay. In other words, if you make $150,000 a year, and you pay $30,000 a year in alimony, your taxable income is reduced by $30,000. If your current tax rate is 33 %, you reduce your tax obligation by $9,900, by not paying taxes on the $30,000 paid to your ex. This tax deduction has been available to those who pay alimony for the past 75 years. Family law attorneys routinely consider this benefit when negotiating alimony amounts.