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What 2019 Alimony Tax Changes Mean for Your Divorce

The recent changes to the United States tax code dramatically changed most American’s tax liabilities for the tax year 2019 and beyond. As of January 1, 2019, alimony has different tax implications for both the payer and the payee. If you expect to divorce this year, you should have some understanding of how this tax code change will affect you.

If you’re seeking an alimony attorney in San Mateo, or surrounding areas, visit our alimony page to learn more about alimony payments and what our attorneys can do for you.

WHAT CHANGED?

Prior to the change in the tax code for alimony, an ex-spouse paying alimony could write off alimony payments as tax deductions and the recipient was required to report the received payments as taxable income.  As of 2019 these provisions no longer apply. Alimony recipients will no longer be required to include their received alimony in their total taxable income for 2019, and alimony payers may no longer write off alimony payments as tax deductions.

Many couples rushed to finalize their divorces before the December 31, 2018 deadline to avoid the changes in the tax law. If you and your spouse started divorce proceedings in late 2018 or have not yet received a final decree, your divorce will fall under the new tax law. This change can have a significant impact depending on how much alimony you pay or receive.

OTHER TAX IMPLICATIONS OF DIVORCE IN 2019

If you sell off real estate or other property to settle your divorce, the proceeds gained or paid could influence your capital gains tax liability. If you sell your home, you could then write off up to $250,000 in capital gains on your tax return for tax year 2019 if you file as single.

The child tax credit has also doubled for tax year 2019, meaning each child under 17 is now worth $2,000 as a tax deduction instead of the previous $1,000. Depending on how much a custodial parent makes, this credit change can lead to significant savings on his or her tax return. The Tax Cuts and Jobs Act also altered tax liabilities for mortgage interest and state and local tax deductions and doubled the standard deduction for everyone.