Alimony will now be taxed under GOP bill [View all]
Source: MSN/Associated Press
Breaking up is hard to do. But the GOP tax bill could make it even harder, divorce lawyers say.
The final version of the tax plan, which was released Friday and is set for votes next week, eliminates the tax deduction for alimony payments. Divorce lawyers say this move could make ending marriages an even more drawn-out and expensive process, and the change could be particularly painful for lower-income couples.
Alimony payments, typically codified in the terms of a divorce settlement, are separate from child support. They are the payments that someone gives to an ex-spouse who earns less money.
If the tax bill becomes law, the alimony deduction repeal would affect divorces carried out after December 31, 2018. The new rule wouldn't affect anyone already paying alimony.
Read more: https://www.msn.com/en-us/money/taxes/alimony-will-now-be-taxed-under-gop-bill/ar-BBGNuEi?li=BBnb7Kz
Right now, alimony payments are tax free for the payer, and they're taxed like regular income for the recipient. Since the recipient usually makes less money -- and is thus in a lower tax bracket -- it keeps more money in the family unit and away from Uncle Sam. So, if you eliminate the deduction for the payer, then you are effectively taxing the same income twice.
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