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Sweeping changes to spousal support in Ohio

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Dec 26, 2018

The Job and Tax Cuts Act (TCJA) became law in December 2017 and will eliminate the alimony or spousal support deduction as of January 1, 2019. The primary intent of the legislation was to address the growing divide between the alimony reported vs actually paid. The government predicts an additional 8 billion dollars in additional annual tax revenue.

The current law (pre-January 1, 2019) permits the individual who is paying spousal support to deduct it from his/her gross income. Under the new law, the payor will not be permitted to recapture a portion of his spousal support payments by way of a deduction. The net impact of the TCJA decreases the amount of net funds for both the payor and the payee in a spousal support case.

There is a savings clause for those who have planned ahead. In some cases a prenuptial agreement executed prior to January 1, 2019 may be considered a written instrument incident to a decree of divorce and therefore it could be interpreted under the current law to be tax deductible for the payor. If a divorce was pending with a temporary spousal support order prior to 2018, then deductibility may be preserved in some cases even if the divorce becomes final in 2019. Since the current law is not repealed until January 1, 2019, a separation agreement executed by the parties prior to that date may be interpreted under the current law allowing for deductibility. The constitution prohibits ex post facto laws.

If you are considering a divorce, or even a modification of your current spousal support order, it has never been more important to consult legal counsel and educate yourself. The lawyers at Berry & Karl, LLC. are always available through email or telephone to discuss this issue in greater detail.

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