LITIGATION | COLLABORATION | MEDIATION
OFFICE: 973-520-4275 FAX:973-756-4075
Special notice: Alimony tax deduction laws are changing – in effect 01 JAN 2019
The new Tax Cuts and Jobs Act (TCJA) eliminates the tax-deductible aspect for alimony payments on any divorce agreements decided on AFTER December 31, 2018. Before the new guidelines, alimony payments could be deducted by the payer payor for federal income tax purposes, and recipients of alimony had to report the payments as income to be taxed. For alimony obligations pre-2019, this is still the case. However, as of January 1, 2019, payments of alimony will not be tax deductible, nor will the recipients be required to list alimony payments as income to be taxed. Modifications made after this date will also follow these rules unless the modification clearly states otherwise., if the change specifically uses guidelines set by the TCJA. In other words, any settlement agreements or modifications decided after 2018 will follow these new tax guidelines. If you do not favor these changes, it is imperative that you and your spouse educate yourselves to determine how it will affect your divorce and what is the best route for you going forward.
Alimony is the payment of support to a former spouse. New Jersey alimony is governed by N.J.S.A. 2A:34-23. This statute was amended in 2014 and is still often referred to as the “new” alimony statute.
Under New Jersey law, the court may award one or more of the following types of alimony, either alone or in combination:
When determining whether and how to award alimony, the Court must consider the following fourteen factors:
The “new” statute requires the court to give the factors equal weight unless the court has reason to weigh one factor more heavily than another, in which case the court must make specific written findings of fact and conclusions of law in that regard.
Generally, alimony terminates when the recipient remarries, either party dies, or on a specific date set by the court or by the parties in an agreement. Also, the court can terminate or suspend alimony if the payee cohabits with another person.
When negotiating a settlement agreement, parties can determine the modifiability of their alimony depending on their circumstances. Either or both parties can waive their interest in receiving alimony, or they can agree that the alimony amount and/or length cannot be modified under any circumstances.
Alimony can be paid directly to the recipient or paid through the Probation Department and is included as income to the recipient, and is tax deductible (not included as income) for the payor.
Alimony is included as income to the recipient and is deducted from the payor’s income when calculating child support.
Alimony is very fact-sensitive and is different in every case. Wilson Family Law LLC can answer the questions you have about alimony as it applies in your case.
Wilson Family Law LLC
667 Shunpike Road, Suite 5
Chatham, NJ 07928
Office: 973-520-4275 Mobile: 973-202-2823 Fax: 973-756-4075
Copyright 2018. Wilson Family Law LLC. All rights reserved. The content of this website is for general information purposes only. It is not intended to give legal advice, nor does it create an attorney-client relationship. For this reason, you should not send any confidential information until an attorney-client relationship is formally established.