The New Year is upon us and with the beginning of 2019 will come some major changes to tax laws that potentially impact divorces in New Jersey and the rest of the country. Chief among those is how alimony payments will be handled for tax purposes in a divorce. For the past 70 years, alimony has been deductible for the payor and taxed as income for the payee. The benefit to this was that the payor got to reduce his or her amount of taxable income and the recipient paid the income tax, which was typically at a lower rate than that which the payor would have paid.
When considering a divorce in New Jersey, finances are a big piece of what goes into the decision-making process. Alimony is one of the most significant issues to be considered in divorce proceedings. There are many factors that go into determining whether alimony is appropriate and, if so, the amount and duration of alimony payments.