Alimony Tax Deduction Set to Change

Spousal maintenance, or Alimony as it is sometimes referred to, is a legal obligation to provide financial support to a spouse after a divorce or separation.

Alimony, unlike child support, is decided on a case by case basis, either through the process of negotiating a divorce settlement agreement between the parties or by order of a judge in consideration of factors such as the length of the marriage, earning capacity of the spouses, and the like.

Currently, the payor of alimony is able to deduct the payments of alimony on their tax returns while the recipient pays taxes on the amount received as if it were regular income.

This arrangement, of course, is beneficial to the payor of alimony by reducing their taxable income and, since the recipient often makes less money (and is therefore is in a lower tax bracket), the taxes paid are minimized.

All that tax savings is set to change with the new tax law, however. When the law kicks in January 1, 2019, couples considering divorce will want to take into account that the payor spouse of alimony will no longer be able to deduct payments made to the recipient, who will not claim alimony as income for tax purposes.

Generally speaking, anyone already paying support will be not be affected. However, if court ordered alimony is modified after the law goes in effect, your new order will likely fall under the new rules.

Questions About Your Alimony Tax Deduction?

Contact an Experienced Wisconsin Spousal Support Attorney for Answers

The Wisconsin spousal support, alimony and family law attorneys of Jane Probst Law Offices can answer your alimony tax deduction questions. Send us an email or give us a call at (414) 210-3135 to schedule your free consultation.