Maintenance Tax Issues After the Tax Cut and Jobs Act

Family Law Blog

Maintenance Tax Issues After the Tax Cut and Jobs Act

November 19, 2019 | Divorce, Maintenance (Alimony), Wealth

Maintenance Tax Issues After the Tax Cut and Jobs Act

On any Maintenance (Alimony) payment ordered after January 1, 2019, the spouse receiving the maintenance no longer has to pay taxes on it and the spouse paying maintenance can no longer “write off” the maintenance payments. This change is a result of the Tax Cut and Jobs Act (TCJA) passed by Congress in November, 2017 and signed into law on December 22, 2017. 

With the TCJA, individual and business tax rates went down, causing federal revenue to decrease as well.  To help pay for TCJA, Congress went looking for ways to increase revenue and oddly landed on maintenance as one way to do so. 

Under the old tax law, maintenance was considered income and the person paying it could write it off on his/her tax return while the person receiving it would have to pay taxes on it.  In a perfect world,  the deductions and taxes would cancel one another out. However, in practice, this did not happen.  As a whole, people  paying maintenance wrote it off far more than those receiving it paid taxes on it.  Consequently,  the federal government was losing money in this exchange.  Therefore, changing the maintenance law so that maintenance was no longer “income,” and therefore not tax deductible, was a way for the federal government to increase revenue to help pay for the TCJA. 

The Botti Law Firm, P.C. has been serving DuPage and Cook County residents for nearly 50 years.  If you would like to speak to one of our experienced attorneys, please email us or call (630) 573-8585 to schedule a free consultation.  



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