Alimony & the Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act, passed by Congress and signed into law in December 2017, eliminates the tax deduction of alimony payments, for new alimony agreements, or Judgments of Divorce, entered starting Jan. 1, 2019.
This law does not affect those who have been paying alimony — either by separation agreement or court Order. The payor will continue to deduct the alimony payments from their annual taxes, and, the recipient must still claim the payments as income.
Since the changes do not take affect until January 1, 2019, the “old tax rule” of deductibility still applies until the deadline of Dec. 31, 2018, either by a settlement agreement or court-ordered alimony judgment.
The “new tax rule” applies to those who get divorced or reach a signed agreement in 2019. The spouse paying alimony will no longer be able to deduct the support from their gross income, and the alimony payments will be tax-free for the recipient.
If you have been putting off finalizing your divorce, you may want to speak with your tax advisor about the change starting in 2019, which, typically, shifts the tax burden to the higher earner.
Recently Reported Family Law - Decision Summaries
from the New Jersey Judiciary
APPROVED FOR PUBLICATION
FAMILY LAW | CIVIL PROCEDURE
September 15, 2018
20-2-7119 Dever v. Howell, N.J. Super. App. Div. (Fasciale, J.) (19 pp.) Plaintiff appealed from the order requiring him to return the parties' children to New Jersey from South Carolina. Because plaintiff had initially considered relocation to Florida, the parties entered a limited consent order permitting plaintiff to relocate with the children to Florida. Plaintiff never moved to Florida; instead, plaintiff provided defendant with less than one day's notice that he was moving with the children to South Carolina. Although defendant objected, plaintiff moved without first obtaining an order permitting relocation. Defendant filed an order to show cause, which the trial court granted. The trial court found plaintiff knew he was statutorily obligated to obtain an order permitting relocation to South Carolina but removed the children anyway in fear the trial court would grant defendant's pending motion for overnight visitation. Plaintiff moved for reconsideration, requesting for the first time a best interests analysis. The trial court rejected plaintiff's attempt to shift the burden of proof to defendant. On appeal, the court affirmed the trial court's order, agreeing with the trial court that, because defendant objected to the relocation, plaintiff was statutorily required to first obtain an order permitting removal of the parties' children from New Jersey before relocating them. The court further ruled that plaintiff could not ask the court to consider whether "cause" for relocation existed after plaintiff effected said relocation because doing so ignored plaintiff's burden to show cause before the move and violated the rights of defendant, the noncustodial parent, to develop and maintain her relationship with her children. The court held that a parent could not remove children and make the other parent demonstrate it would be in the children's best interest to return them. Finally, the court noted that its ruling was without prejudice to plaintiff's filing of a motion for leave to relocate with the parties' children, prior to effecting any such move. (Approved for Publication)