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How the new tax laws may affect new spousal support orders

Couples divorcing this and last will find themselves in a different taxation situation, thanks to changes to the Internal Revenue Code. The changes impact couples whose divorces were signed after Dec. 31, 2018. This means that Massachusetts couples who divorced in 2019 and beyond will have some different circumstances to work through regarding spousal support and other issues.

Prior to Dec. 31, 2018, spousal support amounts were tax deductible for the payer while the payee had to claim them as income. This had been the case for more than 75 years. Under the new regulations, the opposite is true; those receiving alimony will no longer need to claim it as income, whereas those paying it will. As for child support payments, they are now ineligible for dependency exemptions.

The receiving spouse may still have some bills to foot, however. Should a payer spouse use funds from his or her individual retirement account (IRA) to pay for alimony, the receiving spouse will then need to claim it as income. This limits receiving spouses’ ability to reinvest money paid from an IRA back into their own retirement, as they are legally required to pay income tax on it.

In addition to these changes, divorce expenses are also impacted by new taxation regulations. Legal fees and expenses related to divorce, which were previously tax deductible, are now considered personal expenses under the law. All these changes have impacted what divorcing couples may consider “fair” arrangements for spousal support, child support and property division resulting from a divorce. A Massachusetts family law attorney can help individuals in the state to better understand current tax standards and to gain insight into options for working through a divorce.

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