Close Search

Website Search

Wakenight & Associates, P.C.

1100 Lake Street, Suite 120, Oak Park, IL 60301

DuPage County | 630-852-9700

Mokena | 815-727-6144   Oak Park | 708-848-3159

Contact Our Firm

NOTE: Fields with a * indicate a required field.
Name *
Email *
Phone *
How would you prefer to be contacted?
No Preference
Briefly describe your legal issue. *

DisclaimerThe use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

I have read and understand the disclaimer.

Contact Us

New Tax Law Scraps Alimony Deduction

Posted on in Uncategorized

In the divorce process, one party may become legally obligated to make alimony payments to the other. Since these payments are typically costly, obtaining tax deductions for the payer has often been a critical step in formulating a divorce settlement.

By contrast, the recipient's payment is generally taxed like regular income. The current setup tends to preserve more money overall to allocate between spouses, helping both parties afford to live separately.

However, the new tax overhaul eliminates the tax deduction of spousal maintenance payments. The alimony deduction repeal will affect divorce after December 31, 2018. this means that in 2019, the spouse paying spousal support cannot deduct it, and the spouse receiving the money no longer has to pay taxes on it.

Legal experts worry this provision will make divorce settlement negotiations tougher and result in less alimony since the money will go to taxes instead. Consequently, the alimony tax deduction may also complicate how child support is calculated and how assets are divided. All of this could make divorce settlement s much more difficult to reach, leading to litigation - and more money spent.

Additionally, couples working out prenuptial - and postnuptial - agreements should be aware of how the provision will affect clauses that outline what alimony would look like should the couple get divorced. Until now, those clauses have often been drafted under the assumption that the alimony tax deduction will be in place.

According to the data provided by the Internal Revenue Service (IRS), an estimated 598, 888 taxpayers claimed the alimony deduction on their Form 1040, for a total of over $12.3 billion, in 2015. Congress's nonpartisan Joint Committee on Taxation estimates repealing the deduction will add$6.9 billion in new tax revenue over 10 years, which is equal to less than half a percent of the$1.5 trillion tax cut plan.

If you are interested in filing for divorce in Illinois, schedule a free consultation with our experienced legal team at Wakenight & Associates, P.C. today.




Contact Us

Contact Us



Back to Top