Due to provisions of the tax law overhaul that was signed in December 2017, many Illinois couples in unhappy marriages might find a new reason to call it quits sooner rather than later. An attempt to avoid a provision in the new law that will soon make alimony payments more costly could produce additional filings. This part of the tax bill will be effective for divorces finalized in 2019 and thereafter.
Some family law attorneys have noted an increase in inquiries and initial appointments following the enactment, especially for couples with significant assets who are likely to be impacted by the change. The current system allows alimony payers to deduct the amount on their tax returns. This will change in 2019, when alimony will no longer be eligible for a tax deduction, thus lifting the cost of those payments overall. Despite the new law, people who finalize their divorce in 2018 will continue to function under the existing system throughout the period of spousal support payments.
There can be a downside for the recipients of spousal support to the move toward earlier divorces. Currently, alimony is considered taxable income to the recipient, but that will change for divorces that are finalized in 2019 and thereafter. This could make waiting appealing for some recipients. There were no changes made to the tax treatment of child support, which remains neither deductible to the payer nor income to the recipient.
People who are facing the end of their marriage now have another thing to think about. They will likely be taking this into account when discussing settlement negotiation strategies with their attorneys.