News

The new tax law could make divorces uglier with change to alimony payments

INDIANAPOLIS (WISH) — Divorce settlements in Indiana and around the country could get uglier and more difficult.

Indianapolis divorce attorney Darryn Duchon said it’s because of a wrinkle in the new tax law.

As a family breaks apart, the problems go beyond starting new lives. The divorce itself can be ugly and costly.

Front and center on divorce attorneys minds: alimony payments.

How it works right now: whoever is paying the alimony gets that amount deducted off their income. The money is added to the spouse’s tax returns.

So Duchon said there was an incentive for couples to settle an alimony payment.

But now, he said they are not going to get a tax deduction.

The change is due to the new tax law. It only affects agreements made after the end of 2018.

Indiana happens to have the sixth-highest divorce rate in the country.

Duchon said even though the state has a very narrow definition of what qualifies for alimony, divorce attorneys often struck agreements between the divorcing couple thanks to that tax benefit.

Duchon said that could mean longer divorce negotiations but also it will impact how much money is paid out.

“For the person who is going to get alimony, they could potentially realize more because they don’t have to pay taxes on it,” he said. “The person who has to pay it, it’s going to cost them more because they don’t get a tax deduction.”We’re examining the new tax law every Monday this month. Got a question for Eric?APP USERS: Click here to send your questions