Tax Reform and NJ Divorce

[Updated for conference committee update] Each house of Congress recently passed tax reform bills and a conference committee has “compromised” on the differences to produce a uniform bill to be considered by both houses. This isn’t a tax blog but a family law and divorce blog primarily for New Jersey.  So let’s discuss how the tax reform might impact divorcing couples.  I see two main areas of impact. First, the tax reform bill eliminates the deductibility of alimony for any new agreements made after 12/31/18.  Agreement modifications made after that date could still have the tax treatment so long as the parties still desire it.  Typically, the higher-earner pays alimony to a lower-earning spouse.  Although the lower-earning spouse would pay taxes on the alimony received and the higher-earning spouse would be able to deduct the alimony paid, they would be in different tax brackets.  So taxes paid would be at a lower…

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