Unlike in divorces that were entered prior to December 31, 2018, alimony payments will no longer be tax deductible for the payers moving forward, and the recipients cannot declare the amount they received as taxable income. The law also explicitly authorizes ex-spouses to regroup and modify an earlier divorce agreement, in order to append their agreement with the new law involved. If a pre-2019 divorce is not modified, the previous tax laws that were in place during the divorce are applied.
The new tax law has some positive benefits, such as bringing in nearly $7 billion to the IRS. Unfortunately, there are serious speculations and concerns that it will inadvertently put the support-receiving party at a disadvantage. Women, who are statistically more likely to be the support-receiving spouse, and at a financial disadvantage during the divorce, are going to see a decrease in the amount of alimony paid.
Because of the new tax rules, there could be less money to go around, resulting in smaller alimony payments. For instance, the monetary amount you receive from alimony might not be taxable to you, but at the same time, the amount that’s going to be paid out may not reflect that at all.
As mentioned earlier, if you were divorced prior to the start of enforcement of the law, you can keep your alimony agreement and utilize the deduction allowed under the old tax rules. However, the option is still available, if desired, to restructure it with the new tax law applied.