Millions of Americans were surprised this year when they saw their tax bills and realized that they were not going to get the refund they expected. This past tax day was the first since the new federal tax law went into effect, and the changes remain highly controversial. One change that has received somewhat less attention makes a big difference in divorce and alimony, and attorneys are trying to help their clients find ways to deal with it.
Starting for divorces completed this year, under the new law, paying spouses will no longer be able to deduct the cost of alimony the way they would deduct a business expense. Spouses receiving alimony no longer must report it as income.
The change may not make a big difference for people whose divorces were completed before 2019, but it will make a difference in the way alimony is negotiated in divorces from now on.
Also known as spousal support, alimony consists of regular payments made by one ex-spouse to another. North Dakota law does not require alimony in all divorces, but courts may order one party to pay alimony to another in cases where division of the marital property leaves one party at a distinct disadvantage.
Most divorces are resolved out of court today. This means that in most cases where alimony is an issue, it is the parties themselves who develop an alimony agreement, rather than the court imposing an alimony order. Until this year, the parties would negotiate alimony as part of the package of issues involved in a settlement. In previous years, the prospect of a tax deduction made alimony somewhat more appealing to paying spouses. Under the new law, that incentive is greatly changed.
There are many things to think about when going through a divorce. It is important to have help from a lawyer who has experience with divorce and is knowledgeable about how new cases can be affected by changes in the law.