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Divorce, alimony and the new tax law

The recently passed tax law will change the way alimony is handled in Georgia for tax purposes, effective Jan. 1, 2019. Since 1942, tax law allowed the person paying alimony to deduct the amount from his or her income and the person receiving the alimony paid income tax on the amount received. Since the income of the alimony recipient is typically lower than that of the person paying alimony, the recipient is likely being taxed at a lower rate than the person paying the alimony.

As of Jan. 1, 2019, the person paying alimony will no longer be able to deduct the amount of alimony from his or her income. A recent question has arisen as to how the change in the law will affect existing alimony arrangements. Existing agreements will not be affected, as they were grandfathered in under the new law.

Another concern regarding the new law is that alimony payments may decrease. With one party being fully responsible for the tax, the amount available for alimony may decrease and the court may order a lower amount be paid than would have been the case under the old law. A person considering divorce could benefit from reaching a divorce settlement before the new law goes into effect.

Divorce is a complicated and difficult undertaking. The new tax law may not simplify the process. A person considering divorce in Georgia may want to seek the advice and counsel of an experienced family law attorney. A knowledgeable lawyer can review the financial situation of his or her client and may be able to assist him or her in reaching an alimony settlement that is fair and equitable.

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