After 2019, those who have gotten a divorce and signed into a final separation agreement will not be able to write alimony off as tax deductible. This was a huge incentive for them typically, so wealthy couples are now rushing to the courthouse in order to make sure that their agreements are signed before the year of 2019 when the law finally gets enacted. With a pre-2019 agreement, couples will pocket much more during tax season than they will post-2019.
- Divorce lawyers are finding themselves in the unusual position of urging clients to speed up their divorces because of the loss of the tax deduction.
- About 600,000 taxpayers claim the tax deduction on alimony payments in any given year.
- The change will be especially disruptive in cases where spouses have widely disparate incomes, since these cases typically involve more alimony, and will hit the wealthy hardest.
“Under the law, Americans who finalize or modify divorce agreements in 2019 or later will no longer be able to deduct alimony payments from their taxes.”