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 ...
Reading the article helps.
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How old are you? That’s a pretty dated point of view, not reflective at all of current reality.
No kids.
If there were it would be considered Child Support and would not be deductible.
No, spousal support is completely separate from CHILD SUPPORT... you are confusing 2 issues.. you very much can pay spousal support even if you have zero kids.
Secondly, the overwhelming majority of divorces are initiated by the woman, not the man.
I won’t defend a dead beat Dad, but this stupid storyline that most men abandon their kids is not remotely backed up by any facts.. its a narrative sold by lifetime television and feminist lies. Does it happen? Yes.. is it the majority? Hell no.
Will the woman be taxed on the money?
If this is done, it must apply ONLY to divorce settlements reached after the law is passed.
Too hard to understand for Republicans?
“go Flat Tax”
It’s the ONLY fair system of taxation.
Otherwise you’re screwing somebody. So that you can benefit somebody else.
Single folks especially are getting screwed.
Not a good idea. If they want more cash make the alimony taxable at the payers rate.
“it must apply ONLY to divorce settlements reached after the law is passed.”
It’s effective on the effective date of the bill.
Currently the woman is taxed on the money as income. In the future, under this bill, the payor will be taxed on the money and it will be tax free to the woman.
The only way I see this being a valid computation is that Alimony 'generally' flows from higher income to lower income. So you make the alimony payer unable to claim an adjustment against income, thus having a higher taxable income (AGI). The alimony receiver looks to still have to include the income so the net is that there is more income being taxed.
I think that this is more than a bit in violation of the basic concepts of our tax code. As a rule the emphasis has been that all dollars are taxed but only taxed once. Yes, this is not followed in the Estate, Dividend and Capital Gains but has been a background rubric in most of the other areas. Here for Alimony, the dollar would be taxed twice, a bad thing in my book.
The State should have no business enforcing alimony or child support laws.
Tax friendly laws promoting divorce are wrong. We should not be enabling divorce and making it easier.
“How old are you? That’s a pretty dated point of view, not reflective at all of current reality.”
77, married to the same woman for more than 51 years, raised three children, and put each of them through a major university. They all come home often and we’ve lived our entire life in the San Francisco East Bay Area. So if I’m “dated” for being a decent human being who has lived a quality life, sign me up! And FWIW, just what is “all of the current reality?” Basically you don’t want to ascribe to basic principles of human decency I guess!
“Here for Alimony, the dollar would be taxed twice, a bad thing in my book.”
That is the entire concept and premise of the SALT deductions.
One should not tax the same dollar twice, nor tax those dollars used to make tax payments.
"Congress is not empowered to tax for those purposes which are within the exclusive province of the States."—Justice John Marshall, Gibbons v. Ogden, 1824.
So patriots need to support state sovereignty-respecting primary candidates who will commit to making probably most (all?) federal tax deductions permanent.
In fact, patriots need to support candidates who will commit to express-laning a ConCon for the ultimate tax-reduction plan imo, repealing the 16th and ill-conceived 17th Amendments.
For those patriots concerned about a possible overthrow of the country by a pirated ConCon, note that the product of a ConCon is never a new amendment to the Constitution, but a proposed amendment that the states can either reject or ratify.
In the mean time we have to deal with the reality of the political world and the IRS.
“Too hard to understand for Republicans?”
The Republicans are in the process of Effing up a Wet Dream. There is NO HOPE for the Trump Presidency unless we get rid of dozens of these people in the Congress. if we wiped out the Congress and used a dart board to re-fill it, we would get better legislation and it would be on a timely basis.
A good divorce lawyer has been putting in any agreement a clause saying that if the tax code changes, the alimony is adjusted.
10k to 20k? I wish! My ex is hammering me for $3,200 a month!
This is a God-awful attack on divorced men!
NO ONE gets divorced for tax benefits. There is nothing “divorce friendly” about not making a man pay income tax on income he never sees, and allowing a woman to live tax-free on income she DOES receive. If anything, this change would encourage more women to seek divorces.
As a rule, the person receiving income pays the tax. Seems fair to keep it that way.
And no, I’m not divorced. Makes no $$ difference to me. Not a penny. But I have volunteered to help people on their tax preparation, and a LOT of divorced guys get raked over the coals in their taxes. This may be the ONLY part of tax law affecting the divorced that doesn’t screw the guy shamelessly - and I see no reason to change it.
I’ve sat there and listened to the now ex-wife shout, “I’m gonna F$#@ you so hard on your taxes!” And with this single exception, the tax rules DO allow her to screw her ex mightily.
“A good divorce lawyer has been putting in any agreement a clause saying that if the tax code changes, the alimony is adjusted.”
I’m sure they will now.
But spousal support has been deductible since 1954.
Who could foresee THESE Republicans?
And every state in the union has provisions for spousal support. And men in every state deduct it.“. Not sure Texas does
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