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Georgia changes tax deductions for alimony

Georgia laws are changing tax deductions for divorcees, and the new rules are taking impact starting at the end of this year.

Under previous tax law, Georgia deducted divorce alimony payments by the payer spouse and counted it as income to the recipient spouse. Recently, congress passed a new law which eliminates a tax deduction for alimony payments beginning in 2019.

Any couple in a divorce that starts after December 31, 2018, the spouse paying alimony cannot deduct the payment, and the spouse receiving alimony no longer has to pay taxes on it. It won't impact couples who divorces or sign a separation agreement before 2019.

Congress hopes couples will not rush through divorce proceedings in order to qualify for the tax deduction, but many spouses should consider the implications of the new tax law before starting the separation process.

Alimony under Georgia law

Alimony, or spousal support, is defined as money that is paid to a former spouse following a separation or divorce. It does not include child support. The purpose of alimony payment is to maintain a spouse's standing of living following a divorce.

In Georgia courts, they consider several requirements before awarding spousal support to either party. Some factors impacting alimony include:

  1. Standard of living established during marriage
  2. Duration of the marriage
  3. Age and physical and emotional conditions of the parties
  4. Financial resources of each part
  5. Contribution each party makes to the marriage
  6. The parties' earning capacity
  7. Other relevant factors depending on specific cases

There isn't a specific process for calculating alimony in Georgia, so the judge is the main predictor of what expectations are for spousal support.

Impacts of new tax law

The new tax law puts alimony payees into a significant disadvantage as they have to pay taxes on alimony payments while their former partners do not have to claim their alimony as "income." Because of these implications, alimony might be harder to receive or the amount award might be lower due to the increased tax payments for alimony payees.

Based of initial reactions, the new law may change how divorcing couples will negotiate alimony payments in the future. If you are considering a divorce and believe this new law may impact you, consult a financial planner or a legal expert to see how your situation can differ.

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