Alimony and the New Tax Law
The new tax law that was enacted on December 22, 2017 changes the rules for alimony. The deduction for alimony paid and the inclusion in gross income of alimony received is eliminated for new divorce or separation agreements executed after December 31, 2018 and for some agreements that are modified after that date.
All agreements executed on or before that date will continue to follow the old rules that allow the deduction of alimony by the taxpayer that makes the payments and require the inclusion in gross income for the taxpayer who receives the payments.
If a client is currently finalizing a divorce, executing the divorce or separation agreement before the end of 2018 may prove advantageous, and practitioners should consider reminding clients about the change in the new law.