The tax reform law that took effect in early 2019 was supposed to be beneficial to the working class, but when I realized just how heavily my own life was going to be negatively impacted by these tax law changes, I was shocked and angry—to say the least. My name is Ethan Rains, and this is how the Tax Cuts and Jobs Act has influenced me and my family.
Details of My Settlement
When my marriage ended in early 2019, I had the best divorce lawyer in Rancho Cucamonga handling my case. My ex-wife and I were able to amicably decide that she would remain in the home we shared with our children and that I would continue to provide financial support through alimony payments, as she had worked as a stay-at-home mom for the last 15 years.
Overall, our divorce was probably the easiest part of our whole marriage, so I didn’t really take issue with continuing to support my ex since she is the mother of my children and I want her to be able to care for my kids properly. However, I also was under the impression that alimony was tax deductible—and it was . . . until the Tax Cuts and Jobs Act took effect.
Alimony Is No Longer Tax Deductible
Imagine my surprise when, as of 2019, alimony is no longer tax deductible. This means that while I was planning on deducting my sizable alimony payments to lower my taxable income and thereby increase my refund or lower my tax bill, this is no longer a possibility.
Now, I’ll be stuck paying taxes on the income used to pay my alimony while my ex gets away with not having to report this money as a source of taxable income. I am more than a little annoyed at how these costs will affect me as I plan for the 2020 tax year.
Although I knew my divorce being finalized in early 2019 would mean the Tax Cuts and Jobs Act would affect my divorce settlement, I didn’t fully grasp the ultimate impact, and now I have to pay for that lack of understanding.
Had I been more thorough in ensuring that I clearly understood what the tax reform law would do for me, I may have fought to have the finalization of my divorce expedited, rather than taking our time to iron out every detail.