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Divorce Tax Planing. 2019 Means New Rules

Unfortunately many marriages end in divorce. If you are anticipating divorce timing is crucial. Starting in 2019 under Federal law, any alimony payment made under a divorce agreement signed after Dec 31, 2018 will not be deductible by the ex-spouse. In addition under Federal law, any alimony payment received under a divorce agreement signed after Dec 31, 2018 will not be taxable to the ex-spouse.

So if you anticipate paying alimony, it would be beneficial for the agreement to be signed by December 31, 2018 in order for you to claim a tax deduction.

So if you anticipate receiving alimony, it would be beneficial for the agreement to be signed in 2019 order for you to receive alimony tax-free.

All existing divorce agreements prior to January 1, 2019 will retain the alimony tax deduction as well as taxability to ex-spouse.

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Richard Pon CPA, CFP