Posted on 11/07/2017 12:19:30 PM PST by Mariner
Since details of the new tax overhaul bill were released on Nov. 2, people of all income levels and ages have been trying to figure out how they could be affected going forward. One group of folks not likely to be happy: those paying alimony.
Section 1309 of the House bill would eliminate the deductibility of alimony. Killing the alimony deduction is one of the smaller revenue targets for the House Republican tax bill, yet it is exceedingly significant to the people affected.
Under current rules, alimony payors may deduct their payments from their taxable incomes, thus lowering their income taxes. In return, recipients pay income taxes on their alimony income. Because payors are usually in higher tax brackets and recipients in lower tax brackets, families can save money on taxes by shifting the tax burden to the lower earner. The saving can help increase cash flow for divorcing couples. They can then decide how to allocate the savings: to the payor or the recipient ... or the court can do it for them.
According to the House, abolishing the alimony deduction would not be a large revenue generator. Over 10 years it raises only about $8 billion. That is because the tax increase on payors is offset by a tax decrease for recipients. For them, alimony income would no longer be taxable.
This wrinkle could have a significant impact on divorce settlements. For many payors, saving taxes on alimony payments is the one pain relief that comes with making the payments. According to John Fiske, a prominent mediator and family law attorney, "Alimony is the greatest tax deduction ever." Without the deduction, payors will find it much more expensive and more difficult to agree to pay.
(Excerpt) Read more at yahoo.com ...
Every man who paid last year, and will pay going forward, is hurt by this.
Bigly.
Good, maybe it will force some much needed change.
So if the person paying can no longer deduct it then does the recipient no longer pay taxes on it/
If they do this, I will retire 5 years early. It will not be worth working.
Incredible.
I didn’t know any stupid states still had alimony laws. High tax liberal states, I’m sure.
And for alimony to be a tax deduction? Even more insane.
That should be the first tax break eliminated.
Well, it’s not a value-added transaction, it’s just slipping money from one hand to another. It should either be taxable/deductible on both ends or neither. Otherwise, they’re collecting taxes on churning money as if it were ‘income’.
Agreed, this is a huge further shaft, generally to the male, in the divorce system which is already hugely skewed against the male.
Exacty Alimony will become tax free federally for the recipient.... Just like Child Support is today
3/4 of all divorces are initiated by the woman.
99% of all spousal support is paid by the man.
It’s not just alimony. It’s all spousal support.
And every state in the union has provisions for spousal support. And men in every state deduct it.
Hell, since we’re doing our best to destroy the institution of marriage in this country, why don’t we just kill alimony?
Do we let the alimony payer pay alimoney with pre-tax dollars and tax the alimony recipient by treating it as income?
Or do we let the alimony payer pay alimony with post-tax dollars and let the alimony recipient get it tax-free?
The tax-man gets a comparable bite either way, so it should make little difference to the Feds.
Why should a guy pay taxes on 10-20.K he never sees?
Why shouldn’t the person RECEIVING it pay the taxes on it?
“So if the person paying can no longer deduct it then does the recipient no longer pay taxes on it/”
Care to read the article before posting?
“If they do this, I will retire 5 years early.”
I’ll be joining you.
I paid $28k in support in 2017.
That’s it in a nutshell.
“Do we let the alimony payer pay alimoney with pre-tax dollars and tax the alimony recipient by treating it as income?”
Yes, that’s the way it works.
“Agreed, this is a huge further shaft, generally to the male, in the divorce system which is already hugely skewed against the male.”
Yes, but then the males bang out a bunch of kids with a woman whom then then divorce and usually leave her alone to raise them. Guys, time to put your dicks down if you don’t want the responsibility for the children their “use” brings. If there are no offspring, then there should not be any long-term spousal support.
“If there are no offspring, then there should not be any long-term spousal support.”
There’s at least a dozen states that award long term spousal support.
And EVERY state award temporary support.
With or without kids.
“I paid $28k in support in 2017.”
Is any of that money being used to support children you fathered?
This. This is why we need to eliminate all special interest tax deductions (mortgage interest, alimony, retirement contributions, tax credits for kids, charitable gifts, etc.) and go Flat Tax.
Unless and until the Tax Code is fair and simplified - the ideas and proposals here will have little to no useful benefit for everyone.
Except of course the 47 percenters.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.