Many individual know that spousal support is often an outcome of divorce settlements. In instances where one spouse may have earned more money than the other, the higher-earning spouse often has to make alimony payments. These payments can help lower-earning individuals maintain their lifestyles and meet other financial goals, and recent legislation regarding taxation on this support may interest Utah residents.
It was recently reported that Republicans in the House of Representatives have proposed a tax plan that would change the way in which alimony is taxed. Currently, individuals who pay alimony have the ability to deduct their payment amount from their taxable income, and recipients of that support must pay taxes on the received amount. With this proposal, recipients would no longer be responsible for handling the taxes.
On the other hand, Republicans in the Senate have their own tax plan. This plan would result in alimony taxation remaining the same. If the House plan is passed through Congress and into law, courtrooms may see a difference in how alimony negotiations are handled. Because the tax break was often an incentive for higher support payments, changes in tax responsibility could have considerable impacts on divorce outcomes.
Changes in tax law can significantly impact individuals in many areas of their lives. Utah residents going through divorce may have concerns about possible changes and how they could affect their alimony. If parties have questions, they may wish to consult with their legal counsel regarding whether they may need to change their negotiation strategies or take other measures.
Source: clevelandjewishnews.com, “Proposed tax changes may impact alimony awards”, Andrew Zashin, Nov. 21, 2017