How the proposed tax reform could affect alimony

Divorce and politics don’t always go hand-in-hand. However, that can change very quickly when family laws and legal procedures are up for debate — and when there is money on the line.

Most recently, alimony has garnered political status thanks to the proposed tax reform bill from the House of Representatives. According to the proposed changes, tax deductions for alimony payments could be eliminated, which could have a dramatic impact on divorcing spouses right here in North Carolina.

Tense negotiations

If the alimony provision succeeds, then the spouse paying support will no longer receive a deduction on those payments. As such, it would be in the paying spouse’s best interests to fight for lower payments, while the recipient spouse would still want to fight for more. The lack of a tax deduction could drive parties further apart and make negotiations even more difficult.

Fewer alimony awards, lower amounts

Without a tax break to soften the impact of paying alimony, fewer people could be inclined to pay it. And if they do agree to pay alimony, they will likely want to pay less than they would have with the tax deduction.

What to do about alimony now

Whether this provision passes remains to be seen. In the meantime, though, spouses who are stuck on negotiations about alimony and those who have yet to discuss the topic would be wise to think about resolving the matter sooner, rather than later.

Laws can change unexpectedly, and it is not always clear how a change might affect individuals navigating the family legal system. In order to protect yourself from unfortunate surprises and costly oversights, it can be a good decision to discuss any concerns or questions you have about issues like alimony, divorce and child custody with an attorney.

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