On January 1st, 2019 there were a number of changes to tax laws both federally and in Florida. While these changes impacted many areas of life, one of the most significant areas is divorce and alimony. All divorces that take place from now on will be handled using the new alimony laws, so you need to make sure to be aware of how this will impact your case.
How the Law Used to Work
If you are like most people, you have talked to friends and family members in Florida who have been divorced. In these conversations, you may have discussed how alimony payments are handled and how they are treated when it comes to paying taxes. Prior to January 1st, 2019, all alimony payments were deductible for tax purposes by the person who is paying if the alimony was established by a court order or if the parties’ agreement stated so. The recipient of alimony payments would then have to pay taxes on this type of income. Under the current law, however, this has been reversed.
Updated Alimony Laws
For all alimony arrangements going forward, alimony payments are not tax deductible and the recipient won’t have to pay taxes on the money they receive. This will need to be taken into account when negotiating divorce settlements and will likely result in a lower total amount being paid to help offset the added tax burden that the payor is now responsible for.
Who Do These Laws Benefit?
At first glance, it may seem that the updated alimony laws will benefit the person who receives alimony payments, but that typically won’t be the case. The courts take taxes into account when determining the amount of alimony that needs to be paid, so in most cases, the total amount paid will go down as the payor will have less ability to pay since his taxes will be on his full income and not just his income after paying alimony. Since the person paying alimony will always have a significantly higher income, their new tax burden will be at a higher rate than it would have been for the recipient. This means that the only real winner from these alimony law changes is the government, which will be bringing in even more tax revenue from alimony payments.
Dedicated Attorney in Miami, Florida
It is clear that the new alimony laws in Florida are going to have a big impact on divorce cases going forward, which is why our team has spent countless hours learning the ins and outs of the new law. As a leading divorce firm in Miami, we are committed to ensuring you get the best results possible for your case, and that means knowing everything possible about all relevant changes to the laws. Please contact us to go over your situation and get the legal representation needed for your divorce.