The end of alimony has hit couples in Connecticut and is starting to make waves, according to a recent report. After an alimony deduction has been available for splitting couples for the last 75 years, it is now no longer available due to the Tax Cuts and Jobs Act of 2017.
Is this a good thing, or could it cause more problems? The reality is that the repeal of the deduction threatens people in Connecticut more than in other states. Prior to the bill, anyone who paid alimony was able to take a deduction for those payments on his or her taxes. That means that the alimony could reduce the amount owed in tax, giving them a break on taxes and helping them make alimony payments in full each month.
When this is repealed, it hurts everyone. Those paying alimony no longer get a tax deduction. Those looking to receive it may find they aren’t getting the payments they’re looking for or won’t receive as much of a settlement because of the lack of tax relief. Anyone divorcing from 2019 and later will feel the financial strain caused by this single change in law.
If you and your spouse are looking into getting a divorce, getting it in 2018 is a good idea. If you wait until 2019, your case won’t be grandfathered in with the old rules, so you won’t be able to receive the tax reduction you’re used to or want to get. This hurts you financially, making a divorce earlier better on the financial front for most in Connecticut.
Source: Hartford Courant, “End Of Alimony Deduction Hits Connecticut Couples,” Eric Higgins, accessed April 20, 2018