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Spousal Support Changes?

The tax reform bill just proposed in the U.S. House of Representatives will drastically change the deductibility of spousal support commencing January 1, 2019, if passed. Currently, alimony is tax-deductible for the paying spouse and taxable to the receiving spouse. This will change for those divorced after the plan is enacted (signed MSA/Decree after 12/31/17). Thereafter, spousal support/alimony will be paid out of after-tax dollars and will be tax-free to the recipient.

If this bill were to pass, it will mean a different way of calculating spousal support when cases are amicable. In California, it will mean that the child and spousal support calculators will need to be changed to reflect temporary spousal support is not tax deductible anymore.

This is just a draft bill. We will keep you posted.

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