Tax deduction for alimony payments will soon disappear
Getting a divorce can throw a huge wrench into the financial planning of an Illinois resident. If that person was a full-time worker and earned an income that supported them and their family then they may see portions of their pay disappear if they are required to provide their exes and kids with support. Divorcing parties who did not work out of the home and who have no immediate means of earning money once they are on their own may need alimony from their exes just to get by.
Alimony can be an important part of divorce negotiations but the tax implications surrounding it are about to change. At present individuals who pay alimony are allowed to exclude the sum of their payments from their taxable income at the end of the year, but that benefit is about to change. After December 31, 2018, individuals who enter into alimony agreements and who are required to pay will have to pay taxes on the money that they provide to their exes.
Individuals who are in existing alimony agreements will not be affected by this change in the law. Those whose agreements are finalized before the end of the calendar year will be grandfathered into the old system and will be liable for their taxes under the law as it stands right now. Only new alimony agreements created in 2019 will be affected by this change.
Paying alimony and taxes on it will be a heavy burden for some parties who are considering divorce. Readers who are concerned about these and other financial matters related to the ends of their marriages should consult with family law attorneys that they know and trust.