Search Site
Menu
I’m getting divorced in 2019. How will the new alimony tax structure affect me?

With 2019 right around the corner, we want to give you a quick refresher on the alimony changes that go into effect on January 1, 2019.

Alimony, often referred to as spousal support or maintenance, is typically awarded as a rehabilitative measure to help the lower earning spouse get back on their feet financially. In Rhode Island, short-term spousal support is common, whereas long-term alimony is very rarely awarded.

Before the new tax alimony law was passed, the alimony tax structure was often considered a divorce tax benefit.

Here’s the breakdown:

Pre-2019 alimony tax structure: The payer was able to deduct alimony payments from their gross income and the payee had to pay taxes on it.

The rationale: The alimony paying spouse is the highest earner and as such, in a higher tax bracket. The alimony recipient earns less and is taxed in a lower tax bracket. This tax arrangement, coupled with the alimony payer’s ability to deduct the payments from their gross income, often helped divorced couples save thousands on their taxes.

New alimony tax structure: According to the new law, the alimony paying spouse is prohibited from deducting alimony payments from their gross income and the recipient no longer has to pay taxes on the alimony they receive.

The rationale: The government hopes this change will help them earn more than $8B in tax revenue over the next decade.

If you’re the payee or recipient of alimony in Rhode Island, here’s what the new alimony tax structure change means for you:

  • If your divorce is finalized on or before December 31, 2018, your current alimony tax structure stays the same. You’re considered “grandfathered in” to the old tax structure and the new law won’t affect you.
  • If your divorce is finalized after December 31, 2018, alimony will be calculated similarly to child support. As such, it will be a non-taxable event. The alimony payer is not entitled to a deduction for payment and the receiving spouse isn’t able to include the payment as income.

In Rhode Island, long-term spousal support is very rarely awarded. Often, a judge will order spousal support on a temporary, rehabilitative basis, with the goal of getting the lower income spouse back on track.

With the new law, we expect to see another decline in lower earning spouses receiving support. The new tax structure makes alimony increasingly difficult for the payer to handle, so the fight to avoid it will intensify.

As always, we’re here to help you navigate through divorce and alimony. Contact us today for a free consultation.

Meet Our Team
Awards
Watch our video
Testimonials
  • "Thank you! Thank you! Thank you for being the BEST lawyer I have had for EIGHTEEN years! Thank you for listening and following through. You are awesome! This is wonderful! I can’t wait for next week.Thank you for correcting the order to how the judge stated it. Thank you, again, for everything! Also thank your office staff for all their hard work! Hugs to you all!"

  • "Thank you again for your gracious consultation last week. It certainly makes me feel better knowing that you would be guiding me through the process."

  • "Thank you from my heart. You went all out and the results were outstanding. You were diligent, professional, and supportive through a very difficult and ugly divorce. You strategized perfectly and I am so very appreciative."

  • "You are the only lawyers I feel confident working with. Your confidence gave me reassurance as well. I would never hesitate to recommend you to anyone. I believe you are smart, sincere and very capable and I knew that you would do a great job for me. Thank you for protecting my interests and the interests of my children. Being awarded full custody has been a blessing."

  • "Thank you for all of your help in getting me such a great settlement. It is much appreciated! Your combination of skill in and out of the courtroom and knowledge of the law combines with the wonderful ability to listen to your client."

Verdicts & Settlements
  • "Using a nationally recognized valuation expert, we were able to establish the value of a sole medical practitioner’s office that resulted in a verdict giving our client an overwhelming alimony award." - Divorce, alimony and business valuation

Contact us

Quick Contact Form