Before 2018, paying alimony was deductible from your taxes, while receiving it was taxed at 15%.
But the new 2018 tax law switches that around: according to its provision, as of 2019 you can’t deduct the alimony you pay from your taxes, but you don’t pay taxes on the alimony you receive.
The new rule means the government will end up with much more alimony money switching hands than it does before – and significantly changes the economics of divorce. Whether that means a rush to the courthouse will have to be seen. But if it does … talk about unintended consequences!
If your financial life is complicated, you need someone on your side. Contact a Tax Ninja for a consultation.