Divorce Under Tax Reform: The Elimination of the Spousal Support Tax Benefit and Other Changes

The changes implemented by the 2017 tax reform law reshaped how family and tax law attorneys address many common issues in their practice. The law impacted issues like the treatment of alimony, personal exemptions, standard deduction, child tax credits, home mortgage, and home equity loan interest, limitations on deductions for state and local tax deduction, change in business valuations due to the lowering of the corporate tax rates, and increases in the estate and gift tax exemptions.

One shift with the broadest impact on divorcing parties was the elimination of the tax deduction for alimony. Alimony is no longer deductible by the payor or taxable to the payee, requiring practitioners to focus on parties’ net after-tax incomes to determine the appropriate range and structure for spousal support. Likewise, practitioners must be prepared to address whether there is a resulting need for their clients to seek the advice of tax experts prior to negotiations on issues of support.

Practitioners must prepare to advise clients on this critical development and the implications for negotiating and entering into divorce, separation and support agreements. They also need to have a clear understanding of the impact to be in a position to clearly articulate and present these issues at trial.

Listen as our expert panel discusses the practical impact on divorce laws brought about by tax reform.

1. Overview of the new rules under tax reform
2. Changes in net, after-tax cash flow
3. Calculating and negotiating spousal and child support under the new rules
4. Practical advice for amending existing agreements/orders

The panel will review these and other crucial issues:

• The net result of the tax reform and a practical approach to addressing the issue of alimony in settlement and/or trial
• The loss of the dependency exemption and the real value of the child tax credit
• Changes to historical deductions and why they matter
• Changes in net, after-tax cash flow
• The treatment of pass-through income from a business