During tax season the most common question asked was about the tax reform. How will it affect my 2018 tax return? Which expenses are still allowed? How can I plan to protect my self from owing a lot of money next year. Over the next number of months we will be going through certain changes made to the tax law.
Change #4 – Alimony Payment Deduction:
OLD LAW:
Under the old law, taxpayers who were legally required to pay alimony payments to their unmarried ex-spouses were allowed to deduct their payments as a tax deduction on their tax returns. The recipient of the alimony payments were required to report the alimony payments as taxable income.
NEW LAW:
Under the new law, if the divorce decree is signed by the judge before January 1, 2019, the old law still applies. However if the divorce decree is signed by the judge after December 31, 2018, the alimony payments are no longer tax deductible to the payer, and no longer taxable income to the recipient. This new tax law can be good for couples who have been using the alimony tax law to reduce the couple’s total tax liability. It could also be bad for couples who may not like the fact that their payments are still being recorded as taxable income.
You should seek advice from your tax professional when trying to determine how these changes will affect you.
If you have any further questions or would like talk to us about your tax and/or accounting/bookkeeping situation, call us for free consultation at (240) 676 – 0188 or email us at info@triuneaccountinggroup.com. At Triune Accounting Group it is our business to focus on your business, so you can focus on your business.