You may not have been following the new tax bill but in case you haven’t heard alimony is going to have some big changes coming January 1, 2019. Here is some information that you may find useful.
CURRENT ALIMONY LAW
In a divorce, someone may receive alimony. Alimony is the amount of money one spouse pays the other spouse. There are several factors that the courts consider when trying to determine if someone should pay or receive alimony. Florida Statute 61.08 lists out the factors the courts look at which is as follows:
(a) The standard of living established during the marriage.
(b) The duration of the marriage.
(c) The age and the physical and emotional condition of each party.
(d) The financial resources of each party, including the nonmarital and the marital assets and liabilities distributed to each.
(e) The earning capacities, educational levels, vocational skills, and employability of the parties and, when applicable, the time necessary for either party to acquire sufficient education or training to enable such party to find appropriate employment.
(f) The contribution of each party to the marriage, including, but not limited to, services rendered in homemaking, child care, education, and career building of the other party.
(g) The responsibilities each party will have with regard to any minor children they have in common.
(h) The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a nontaxable, nondeductible payment.
(i) All sources of income available to either party, including income available to either party through investments of any asset held by that party.
(j) Any other factor necessary to do equity and justice between the parties.
HOW THE CURRENT LAW AFFECTS YOUR TAXES
Pursuant to current Florida law, the party who pays alimony is allowed to use that as a tax deduction and the person who receives alimony must report that as taxable income unless the parties agreed to something different. In addition, the following conditions need to be present under the current law:
The ex-spouses file separate returns.
The ex-spouses live in separate dwellings.
The alimony payments are made according to the terms of the settlement or divorce decree, and they are always made with cash, checks, or money orders – never with personal property or in-kind offerings.
The alimony payments are paid on a set schedule, not in advance.
The alimony payments continue until the receiving spouse remarries or dies, or as defined by the court.
HOW THE NEW LAW CHANGES ALIMONY
Beginning January 1, 2019, alimony will not be a tax deduction for payers, nor will it be taxable income for recipients. This is similar to how child support is handled. This new law is only going to impact cases going forward not orders already in place which means the law is not retroactive. Anyone paying alimony or any alimony order in place by December 31, 2018 will not be impacted by this law.
If you are considering a divorce and believe you may have to pay or you may receive alimony in your case do not wait. Contact our Orlando Divorce attorneys, Michael Ferrin and Victoria Anderson today. We offer a free consultation. Please call us at 407-412-7041 or CLICK HERE.
