3 Ways Tax Law Changes Will Affect Alimony in South Carolina Divorces

Written by: Megan Dell

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act of 2017 into law, which made tax law changes to the Internal Revenue Code. Some of those changes became effective on January 1, 2019.

Alimony is money paid by one spouse to another after their divorce. Unless otherwise negotiated, these payments have been deductible to the paying spouse and taxable to the receiving spouse. For example, if a husband has paid $1,000 per month to his wife, he has usually deducted $12,000 per year from his gross income and his wife has paid taxes on the $12,000.

The new law changed how alimony is taxed. South Carolina divorce lawyers can not negotiate deductibility when resolving the case.  There are three ways the tax law changes will affect alimony in South Carolina divorces:

1. Divorcing spouses who are negotiating alimony will — collectively — pay more in taxes than before.

2. The increased tax burden will leave less negotiating room, making alimony cases harder to resolve.

3. Alimony amounts will lower than before.

The changes included in the Tax Cuts and Jobs Act of 2017 apply only to alimony obligations entered after December 31, 2018. Alimony orders entered prior to that date have not changed.

To negotiate the best resolution for your case in light of the tax law changes, get advice from a lawyer who understands how the tax changes will affect any claim for alimony in SC divorce.