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Tax Switch In Alimony May Signal Big Changes

Divorcing spouses in Pennsylvania have long been concerned about the financial implications of the end of their marriage. This is only natural as all of a sudden a family must sustain two households on the money that it previously sustained one with. In addition to simply making ends meet from month to month, there are often tax implications associated with different decisions made during a divorce settlement.

USA Today explains that the assignment of alimony is one of these decisions. For more than seven decades, the responsibility to pay taxes on alimony money rested with the person who received the money. Starting in January of 2019, this will shift to the person who pays alimony.

According to the U.S. Census Bureau, the vast majority – as much as 98 percent – of all alimony payers nationwide are men. Some may feel that the tax reform is unfairly targetting men. These men also generally have a higher income and are therefore in a higher tax bracket than their former wives, increasing the amount of tax income the federal government may receive. However, what may end up happening is that divorce agreements may not include the same level of alimony awards that they have, leaving women who earn less struggling even more than before.

If you would like to learn more about how the changes that will take effect to the federal tax laws may impact your divorce negotations, please feel free to visit the tax liability and marital split page of our Pennsylvania family law website.

For more information, contact Louis Wm. Martini, attorney at law.