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Congress passes new alimony tax revision

For approximately the past 75 years, divorced couples knew who would have to foot the bill for certain settlement agreement funds. Recently, though, Congress took the old tax law and reversed the person who now is expected to pay taxes on any alimony funds. The new law will go into effect in 2019 and may impact some Kentucky residents.

Until the revised tax plan was approved earlier in December, the current laws allowed for the spouse who was ordered to make alimony payments to deduct those payments from his or her tax filings. The spouse who was receiving these monies was required to report it as income and then pay the set percentage of taxes on it. Starting in 2019, that will be reversed, and the paying spouse will now also have to pay the taxes on that money.

There are many critics who fear that this change will lead to fewer spouses receiving alimony payments. Others are claiming that it could create a tax break for divorced couples while married ones will pay more in taxes. The Internal Revenue Service stated that there is a lower percentage of individuals reporting alimony payments, while there are more who report having to make these payments. It is unclear whether this discrepancy will now switch with the coming changes or how it can be corrected.

The federal government projects it will realize an increase in tax revenue by an estimated $6.9 billion over the next decade. There has been a push to try and complete some divorces that were in progress before the tax changes take effect. It is unclear how this revision will impact the issue of alimony starting in 2019. Kentucky residents who are in the process of seeking a dissolution may choose to seek the advice of an experienced attorney in order to arrive at the best settlement agreement possible for their unique circumstances.