The Johnson Firm Lawyers

Call Today (337) 433-1414

Tax proposal would eliminate alimony deduction

We don't take political positions in our Lake Charles legal blog, but we do try to keep readers up to date on politicians' proposals that could have an impact on family law.

As you know, Speaker of the U.S. House of Representatives Paul Ryan recently unveiled a plan to overhaul the nation's tax code. If passed and signed into law, the tax proposal would eliminate the deduction for spousal support (also known as alimony).

Experts say the change could change future divorce settlements. Today, an ex-spouse who pays spousal support can deduct it from their federal income taxes. Similarly, ex-spouses who receive alimony must declare it on their tax return as income.

Both of those things would change under the proposal. Spousal maintenance would no longer be deductible for the payor and alimony would not be considered income for the recipient. In other words, spousal support would be tax-free for those receiving it.

According to an Investment News report, if adopted as is, the proposal would take effect on January 1 of the new year. It is important to note that the change in law would not affect couples who are already divorced or would be divorced by Dec. 31, 2017.

How would it change divorce settlements? If you are the person likely to be paying alimony, the cost to you would increase. Losing the deduction might make potential payors less willing to agree to settlements involving alimony, Investment News says.

Because of the current tax break for alimony payors, some divorce agreements today shift payments from child support to spousal support.

"By eliminating the alimony deduction, you are going to be hurting the payee spouse," said a divorce lawyer quoted in the article.

Again, we have no interest in taking a position on the proposal. However, we are proud of our ability to help clients understand their options in complex matters involving spousal support, child custody, property division and all other aspects of family law.

No Comments

Leave a comment
Comment Information
J Est 1980

The Johnson Firm | 910 Ford Street | Lake Charles, LA 70601 | Phone: (337) 433-1414 | Map & Directions