If you’re preparing to file for divorce, and you’ve begun researching what’s involved in doing so, then you’ve likely come across information about alimony. Unless you’ve checked to make sure that you’re reading an article that’s been written in the past year, then it’s likely that the information you read was outdated. New tax laws for handling alimony payments go into effect this filing year.
Husbands and wives who finalized their divorces in 2019 will likely be filing their first individual tax returns this year in 2020. Spouses who pay alimony won’t be able to qualify for a reduction in their taxable income just because they make spousal support payments. Recipient spouses will have the amount they receive taxed. This means that both parties may end up falling into a higher tax bracket than they would have anticipated.
Couples who divorced before 2019 will continue to be grandfathered into the old way of doing things. This means that paying spouses will be able to continue making deductions for alimony payments. Recipient husbands and wives many not have to report the funds that they receive as income either.
This updated tax law has already started to impact negotiations between spouses when settling their divorces. Many husbands have agreed to pay or receive lump-sum spousal support or additional valuable property instead of monthly support payments. Others have taken withdrawals from their spouse’s retirement plan or investment portfolio as an alternative to spousal support as well.
The change in tax code this past year has made discussions about spousal support even more contentious than they previously were. An attorney can help you understand the implications of making certain choices when settling your divorce. Your lawyer will aim to help you understand the different types of alimony in Florida and the implications of agreeing to pay or receive one versus another in your Fort Myers divorce case.