TAX IMPLICATIONS IN A FLORIDA DIVORCE
Every Florida divorce will have tax implications. Special care is required during settlement negotiations to ensure the client does not suffer a tax increase or penalty.
ALIMONY AND TAX IMPLICATIONS
Before the enactment of the 2017 tax act, alimony was deductible to the payor and taxable as income to the payee. This is no longer the case. For any divorce settlement agreement or final judgment entered after January 1, 2019, alimony is no longer deductible by the payor (person who pays alimony), and it is not considered taxable income for the payee (person who receives alimony). Any settlement agreement or final judgment entered before January 1, 2019, will be governed by the old tax rules.
This new tax rule will result in a tax increase for the alimony payor because it is no longer deductible.
WHAT QUALIFIES AS ALIMONY FOR TAX PURPOSES?
For a payment to be alimony, it must meet the following requirements: The settlement agreement or final judgment must require alimony, the alimony must be paid in cash, check, or money order, the alimony must stop when the payee dies, and the former spouses cannot file a joint tax return or live together.
CHILD SUPPORT AND TAXES
Court-ordered child support payments are not deductible by the payor or considered income for the payee.
MY AGREEMENT REQUIRES MY EX-SPOUSE TO PAY THE TAXES
If the parties filed a joint return, then the IRS can hold both parties liable for any tax liability. Even if your settlement agreement or final judgment requires your former spouse to pay a tax debt, you will be responsible for paying the debt if your former spouse does not pay.
Tax issues are complex. If you need strong, experienced counsel to represent your interests, please feel free to call or e-mail The Fuller Firm, LLC. Kevin A. Fuller will schedule a free phone or videoconference consultation. After a thorough analysis of your case, I will answer your questions and advise you regarding the best way to proceed.