Effect of Tax Cuts and Jobs Act on Family Law and Divorce Cases

Effect of Tax Cuts and Jobs Act on Family Law and Divorce Cases

The federal tax reform law, known as the Tax Cuts and Jobs Act (TCJA), which was signed into law by President Trump last year, is a major piece of legislation hundreds of pages long. As a result, it is easy to overlook some changes brought about by the law that could nonetheless have a huge impact on many families. A case in point is the way divorcing couples will be taxed beginning in 2019. The tax reform law shifts the alimony tax burden away from the recipient and onto the payor.

Shifting the Tax Burden

For more than 75 years, those who pay alimony have been able to deduct their alimony payments on their taxes. On the other hand, recipients of alimony have been required to declare the alimony payments they receive as taxable income.

TCJA completely changes this situation, however. For divorces that are filed or modified after December 31, 2018, those who receive alimony will no longer have to declare their payments as income, while those who pay alimony will no longer be able to deduct those payments. In effect, this means that the alimony tax burden shifts from the recipient to the payor. The changes only apply to divorces, separations, or modifications that are filed on January 1, 2019 and later. Divorces from before then will still be treated according to the old tax rules, unless they are modified on or after that date.

It’s not a Tax Break for Recipients

On the surface, the change looks like a tax break for alimony recipients, since the alimony they receive will now be tax-free. However, in effect the changes will likely squeeze both payers and recipients financially. Because payers are usually in a higher income tax bracket, the amount they are able to deduct on their alimony payments is usually larger than what recipients currently pay in taxes on that alimony. That means that payers will simply have less room to negotiate higher alimony payments, which in turn will mean less money for recipients.

Another complicating factor is the fact that many states have alimony guidelines that are built around federal tax law. Once those guidelines are updated, the effect will be lower overall alimony payments to reflect the fact that the deduction is no longer available for payers. Therefore, in effect the shifting of the tax burden from the recipient to the payor simply means a greater share of money that would otherwise have gone to alimony payments will instead go to taxes.

Maryland Family Law & Divorce Lawyer

You should discuss your case with an experienced Maryland divorce lawyer to determine the effects of the new tax law on your alimony or anticipated alimony. You may be able to receive tax benefits depending on whether your obligation is created before January 1, 2019 and whether by a separation agreement or a divorce judgment. The tax law also may affect modification of existing alimony depending on the date of modification. Feel free to call my office (301-309-9002) or email me (shane@kamkarilaw.com) for an appointment regarding all of your family law issues.

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email


No Attorney-Client Relationship Created by Use of this Website. Neither your receipt of information from this website, nor your use of this website to contact Kamkari Law Offices (hereinafter “Law Offices”) or one of its lawyer(s) creates an attorney-client relationship between you and the Law Offices and/or any of its attorneys. You will become a client of the Law Offices only if and when you sign and engagement agreement setting forth the scope of the Law Offices’ engagement, the fee arrangement and other relevant matters. As a matter of policy, the Law Offices does not accept a new client without first investigating for possible conflicts of interests and obtaining a signed retainer agreement or engagement letter. (The Law Offices may, for example, already represent another party involved in your matter.)

No Confidentiality. You may not use this website to provide confidential information about a legal matter of yours to the Law Offices. Your use of this website does not make you a client of the Law Offices or even a prospective client of the Law Offices. If you have confidential information that you would like to give to any lawyer affiliated with the Law Offices, please communicate with one if the Law Offices’ lawyer(s) in person or by telephone–not by filling in any form on this website or by sending an unsolicited email to the Law Offices or any of its lawyer(s).

No Legal Advice Intended. This website includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal issues problems.

No Intent to Refer Matters to Other Firms. Unless otherwise expressly stated on a particular page of the Law Offices’ website, retainer agreement, or engagement letter, Law Offices intends to act as primary counsel in representing clients who retain the Attorney.

Photographs. The photographs on this website may not be of actual lawyer(s), employees and/or clients of the Law Offices unless otherwise noted. The cost of this website is paid for by the Law Offices and not by any other lawyer or firm.

No Guarantee of Results. Some of the case summaries, reports of past results and individual lawyer biographies on this website describe past matters handled for clients of the Law Offices. These descriptions are meant only to provide information to the public about the activities and experience of our lawyer(s). They are not intended as a guarantee that the same or similar results can be obtained in every matter undertaken by our lawyer(s). You must not assume that a similar result can be obtained in a legal matter of interest to you. The outcome of a particular matter can depend on a variety of factors—including the specific factual and legal circumstances, the ability of opposing counsel, and, often, unexpected developments beyond the control of any client or lawyer.
No Claim of Expertise or Board Certification. This website lists areas in which lawyer(s) of the Law Offices practice. In so doing, no Law Offices’ lawyer makes a claim of “expertise,” “specialization” or “board certification.” Any lawyer(s) of the Law Offices who are properly board certified in a practice area have so indicated in their biographies.

IRS Circular 230 Notice. In accordance with Internal Revenue Service requirements, this is to inform you that any information on this website that could be construed as United States tax advice is not written or intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed on this website. See IRS Circular 230.

No Tax Advice. This website is not intended to provide any tax advice. Furthermore Law Offices does not provide tax advice to any client and an services of accountant(s) should be utilized regarding any tax questions.

Links to Third Party Websites. As a convenience, this website provides links to various third-party websites. Such linked websites are not under the control of the Law Offices, and the Law Offices assumes no responsibility for the accuracy of the contents of such websites.

Authorized Practice of Law. The jurisdictions in which each of the Law Offices’ lawyer(s) are licensed to practice are Maryland and the District of Columbia. The ability of any Law Offices’ lawyer to engage in any activities for a client outside of that lawyer’s state(s) of licensure is subject to state statutes, professional standards and court rules. The Law Offices does not seek, and this website is not intended to solicit, legal engagements in jurisdictions outside of our lawyer(s)’ states of licensure when such engagements would constitute the unauthorized practice of law in any jurisdiction. In certain occasions the Law Offices may engage and/or employ of-counsel in other jurisdictions should it be necessary to represent the client outside of Maryland and the Washington, DC.

Responsible Lawyer. The Law Offices lawyer responsible for the content of this website is Afshin Shane Kamkari, Esq.

Bona Fide Office. The Law Offices operates a bona fide office at 10411 Motor City Drive, Bethesda, MD 20817.
Copyright. Copyright © by Kamkari Law Offices. All rights reserved. You may download and print out any part of this website for your own personal, non-commercial use. Any other reproduction or retransmission of the contents of this website without our prior written consent is prohibited.