Is Alimony Taxable in Florida?
To best answer the question of “is alimony taxable in Florida,” we need to look ahead to some significant changes in the U.S. Tax Code courtesy of the Administration’s Tax Cuts and Jobs Act. Currently, and for many years, alimony has been taxable against the payee/recipient, and has been a major tax deduction for the payor (person paying alimony due to an income disparity and a host of other statutory family law factors). There is still an alimony tax deduction in Florida, but be on the alert for changes.
The question that many attorneys are asking is whether the modifications to the Tax Code will have a grandfather clause allowing for divorce and alimony settlements made prior to the start of 2019, to remain under the old Tax Code laws regarding alimony. When more light is shed on that subject, we will let you know the relevant changes, if any. If all divorcees are affected, anticipate a deluge of cases flooding the Florida family law courts when payors seek downward alimony modifications.
For now, to continue answering if alimony is taxable in Florida, the current law, such as it has been for years is that if you are ordered to pay alimony, you may deduct the amount paid to your former spouse from your taxes. If you have been a recipient of alimony, you will continue paying taxes on all alimony amounts received, unless you have a clever accountant and financial planner and have certain tax deductions, breaks, or deferments scheduled to reduce the impact/burden of taxation.
Alimony Tax Deduction in Florida
Moving forward, one of the most fascinating trends to watch will be the impact of the Tax Code changes, vis a vis the Tax Cuts and Jobs Act, to how Florida family law courts award alimony at trial. Currently, the courts take into consideration how much the recipient will be taxed in making an award of alimony. However, if alimony is non-taxable, the payee/recipient will receive more money, and therefore the courts may choose to award less in alimony upfront, but close to the amount he/she would have received had their alimony been taxed on the backend. The alimony tax deduction in Florida may not be here for long.
There are a lot of exciting changes coming to family law courts in Florida and around the country. In the meantime, we hope that your question of “is alimony taxable in Florida,” has been answered to your satisfaction.