Couples in Florida who have made the choice to get divorced will now be moving into new territory as the Tax Cut and Jobs Act takes full effect after New Year's Day. One of the biggest changes for divorcing spouses will be the elimination of a tax deduction for the person who might be paying alimony. Similarly, the person who would receive alimony will no longer claim that money as income and therefore not have to pay tax on it.
The ability to deduct alimony payments from a tax return was often a type of concession that made it more palatable to agree to such payments. Without this in place, spouses might need to get creative in their divorce settlement agreements. As explained by CNBC, instead of making spousal support payments a key element to a settlement, people might instead choose to use their property division settlements as a way to come to a final agreement.
Essentially, one person could buy the other one out of some property. The payments for this may be made over a period of time. Since these payments would be part of the property division award and not alimony, the taxation might be different.
Couples are also encouraged to carefully review their options when it comes to their marital homes. Keeping a home may have long-term implications from a tax perspective that may or may not be in one's best interest. Similarly, the increase in the child tax credit may factor into a couple's decision about custody.