North Carolina residents and others who pay alimony have historically been able to write payments off as a tax deduction. Those who receive alimony payments generally have to claim it as income. However, this will no longer be the case starting in 2019. This has caused some concern that current methods of calculating alimony payments in a divorce are no longer reliable.
The changes could make it difficult to negotiate a divorce settlement because there may no longer be an incentive for one spouse to support the other financially. Therefore, individuals may not feel as if they can afford to leave their spouse, keeping them in an unhappy relationship. Those who have already finalized their divorce settlement may wonder if they can modify an existing alimony agreement to avoid paying taxes. However, it is unknown whether or not the new law would apply to modified agreements originally struck prior to 2019.
As a general rule, those who make alimony payments will have less to provide to their spouses since they will pay more in taxes. While both genders may pay child support, payments are commonly made by men, which means that women may experience negative financial consequences of the new tax law. In addition to receiving less money, it may be harder to save for retirement.
Those who have questions about alimony or other issues related to divorce may benefit from consulting an attorney. A legal professional may be able to explain what alimony is and how payment amounts are calculated. An attorney may also be able to explain how changes to existing tax laws may impact how much alimony a person may receive in the future. This might play a role in when a person chooses to end a marriage.