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Alimony Not Tax-Deductible?

In 2018, President Trump’s Tax Cuts and Jobs Act was passed, causing a few changes that will affect Utah couples who are getting divorced now. Essentially, if you get divorced after January 1, 2019, and there is alimony awarded in your case, said alimony will no longer be tax-deductible. This does not change any divorce decrees that were signed prior to January 1, 2019.

Who Does It Benefit?

In addition, alimony recipients will no longer have to pay federal tax on the alimony they receive. So it benefits alimony recipients, and it hinders alimony payers. Broken down in an example, it looks like this:

Jamie makes $100,000 a year, and Blake makes $20,000. They were divorced in January of 2019, and Blake was awarded $15,000 a year in alimony from Jamie. Jamie must pay income tax on the entire $100,000, and then pay Blake $15,000 in alimony out of what is leftover.

Blake is not required to pay taxes on the $15,000 alimony. In the old model, the alimony payer could pay alimony from income before that income had been taxed (or pay income tax on $85,000 instead of $100,000, using the model above.) Thank your current administration for this.  

Alimony and Cohabitation

One other recent change of note to alimony cases in Utah was the recent court ruling that alimony recipients may lose their alimony if they are cohabiting with a new partner.

If your alimony-paying ex-spouse can prove you are co-habiting with someone else, you may lose your alimony and be required to pay back the alimony you received, starting from the time you began co-habiting. Granted, proving cohabitation can be tricky sometimes and usually requires a private investigator.

Getting Help with Your Utah Divorce Case

Here is the break down of the changes that have happened:

  • alimony will no longer be tax-deductible
  • alimony recipients don’t have to pay federal taxes
  • recipients can lose their alimony if they are living with a new Partner

If you are looking into a divorce or how new tax laws will affect you and need legal help, we’re here for you.  You need to ensure you consult with a competent family law attorney that understands the legalities of divorce and alimony in Utah and will help put your mind at ease so you don’t get taken advantage of.  At CoilLaw, LLC, Provo Divorce and Family Law attorney Jill Coil knows how to advise you during a divorce to help you achieve the best settlement and/or result possible.  

At CoilLaw we are ready and available to help you through your legal action. If you need legal advice concerning a Utah family law issue, call Jill Coil at CoilLaw LLC in Utah at 801-876-5808 today.



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