In an earlier post, we informed you about a part of the proposed tax reform bill introduced in the House of Representatives and its impact on alimony. On Thursday afternoon, the bill passed the House.
So what does this mean?
If approved by the Senate and signed by the President, it would mean that starting in 2018 individuals who have a new order of spousal support entered in 2018 will not be able to deduct spousal support payments from their gross taxable income. For some people, this could have severe tax consequences and add tens of thousands of dollars to their tax bill.
But the provision is far from becoming law.
The Senate version of the bill does not contain this provision. Assuming that the Senate does pass its version of tax reform, the two bills would go to a conference committee and ultimately the Senate would have to agree to the House provision and pass it by a majority vote.
We will continue to keep you up to date on this provision as it moves through Congress.
If you have questions about spousal support and tax reform, contact us – we can help.