💔Divorce and Taxes: A Match Made in...IRS Heaven?💸 - Palma Financial

💔Going through a divorce is tough enough, but it’s important to consider the financial implications, including the tax treatment of child support payments and alimony.

Here’s what you need to know:

💰 Alimony Payments

  • Alimony payments were tax-deductible for the payer and taxable income for the recipient before 2019.
  • A written agreement with specific requirements was necessary to claim the alimony deduction.
  • Not all payments under divorce/separation agreements are considered alimony.

👨‍👧 Child Support Payments

  • Child support payments are not tax-deductible for the payer and are not taxable income for the recipient.
  • The payment is treated as nondeductible and nontaxable if alimony and child support are combined.

📜 Changes in Tax Law

  • Trump’s 2017 Tax Cuts and Jobs Act (TCJA) changed the tax treatment of alimony payments in 2019.
  • Payers can no longer deduct alimony payments, and recipients don’t owe taxes on payments for divorce agreements executed after December 31, 2018.

👉Don’t let post-divorce finances be a headache. Please work with us to ensure compliance with relevant tax laws and avoid challenges from the IRS.

📅 Schedule your tax assessment today and find out how recent changes in tax laws may affect your divorce settlement!