Florida residents who have watched the negotiations around and eventual passage of a new tax bill may still be trying to figure out how it will impact them. For some, the changes might be positive. For others, the changes could be dramatically negative. Spouses who get divorced and may have to pay their former partners spousal support could well find themselves in this latter category.
For any divorce agreement that is finalized after January 1, 2019, a person who pays alimony will also pay income tax on that money despite the fact that they are essentially handing that money over to their ex-spouse in the form of income for that person. This is a huge change compared to divorces that have already been finalized or that will be completed in 2018 where the paying spouse not only does not have to pay income tax on this money but actually gets to deduct it from their tax return.
On the flip side, a spouse who is set to receive spousal support might benefit, or at least that is what some might think. However, the reality is that this change might make spouses who would pay alimony less willing to agree to spousal support awards overall or they may at least push for a lower support amount to help offset the tax hit they might take.
Before making any agreement in a divorce, spouses in Florida might find it advantageous to discuss their situation with an attorney to fully understand the ramifications of any settlement.
Source: MarketWatch, "Under Trump's tax law, you now have a year to avoid a nasty divorce," Quentin Fottrell, February 14, 2018