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Wait–what do you mean I can’t deduct alimony on my federal taxes?

Alimony is a series of monetary payments to an ex-spouse that may be mandated as part of a divorce decree. Paying alimony can be an expensive and painful process—and it is about to get much more painful, thanks to changes to the federal tax code.

At present, those paying alimony may deduct the payments on their federal taxes, while recipients must report them as income. However, the Tax Cuts and Jobs Act (TCJA) reverses this. Beginning in 2019, alimony payments may not be deducted from the paying party’s federal income taxes. However, alimony payment recipients will no longer have to report them as taxable income.

If your divorce has been finalized, or will be finalized before December 31, 2018, you need fear not. The TCJA only applies to divorces finalized beginning on January 1, 2019, or to divorce agreements renegotiated on that date or later.

If you are currently considering, or undergoing, divorce, think of the change to tax law as fresh impetus to bring the process to completion. You need the counsel of an experienced tax lawyer to make sure that your alimony agreement is reached before the cut-off, and that the payments agree with the complex requirements of current tax law to qualify for deductions.

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