2018 Tax Law Changes Tax Deductibility of Spousal Support

2018 Tax Law Changes Tax Deductibility of Spousal Support

By Marcus Morales on Apr 19, 2018 in Spousal Support
Starting January 1, 2019, spousal support paid will no longer be tax deductible by the payor and included in the recipient's taxable income, for federal tax purposes.

The Tax Cuts and Jobs Act (aka the new tax code) changed the tax treatment of spousal support. Prior to the enactment of this tax code, the payor of spousal support would deduct any spousal support paid from his or her income and the receiver of spousal support would income any spousal support received in his or her income for tax purposes. 

Under the newly enacted tax code, starting January 1, 2019, spousal support paid will no longer be tax deductible by the payor and included in the recipient's taxable income, for federal tax purposes.

This applies to : (1) Any divorce or separation instrument executed after December 31, 2018, and (2) any modification of divorce or separation instrument that expressly provides that the amendments by this of the IRC apply to such modifications.

The California Revenue and Taxation Code has not yet been amended to reflect the new federal tax treatment of spousal support and for now, for California state income tax returns, spousal support will cotninue to be taxable as income to the recipient and tax deductible to the payor. 

If you have questions about spousal support, call Morales Law, your Santa Barbara divorce resource today for a consultation. (805) 845-5405. 

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