ALIMONY UNDER THE TAX CUTS AND JOBS ACT

The new tax law included a major change to the tax treatment of alimony.  In prior years, alimony was deductible to the payor and taxable to the recipient.  Beginning with divorces finalized after 2018, alimony will no longer be deductible to the payor nor will it be taxable to the recipient.  This law change does not affect divorces that were finalized prior to 2019 with one exception.  A divorce executed prior to 2019 but modified after 2018 will follow the new law (nondeductible and nontaxable) if the modification specifically states that the new law is to apply to the divorce modification.  This is important to know for those going through the divorce process because the tax ramifications are usually included in the financial analysis of a divorce.