divorce tax implicationsStarting in 2019, the new tax code in Pennsylvania will affect divorcees who pay Philadelphia spousal support. The new law includes a provision that removes the tax break that used to benefit those paying alimony. This change has a few major implications for those who are getting divorced.

How the New Tax Code Changes Deductions for Divorcees

Although each state has its own rules with regard to spousal support, one overarching rule has previously applied nationwide: the payer could deduct alimony on his or her taxes. In turn, the alimony recipient paid income tax on that money. The intention of the deduction, which is no longer available, was to provide tax relief for the ex-spouse with the higher income, who was providing income to the other party. (The assumption is that the ex-spouse receiving support likely fell into a lower tax bracket due to smaller earnings.)

For divorce decrees dated January 1, 2019 and later, the new tax code prevents those who will pay alimony from taking that deduction on their taxes.

Determining Spousal Support

The court system determines an appropriate spousal support amount by considering factors provided by the Legislature. These factors include:

  • Length of the marriage
  • Living standard prior to the divorce
  • Whether the couple has young children
  • Employment opportunities for the spouse requesting support
  • Whether one spouse has contributed to the other spouse’s education or professional licensure

The new tax code provisions about alimony will likely provoke a conversation among couples who will officially divorce in 2019 and later. Those who are in the middle of a divorce should bring up these changes with their attorney to get a full understanding of how alimony will affect their unique financial situation without the previous deduction available.

If you are planning to divorce in Philadelphia, you may have questions about how the tax law will affect you. We welcome you to call our firm to speak with an attorney about your situation.