The U.S. House of Representatives has passed its version of the tax reform bill that was supported by most of its Republican members. It has now moved to the Senate. The Senate's current version of the bill, however, contains some significant differences.
The House bill includes provisions to eliminate some deductions that many people have counted on -- including that for alimony payments -- that the Senate version doesn't contain. Under the House version of the bill, those who receive alimony would no longer report it as income, as they currently do.
Not surprisingly, a number of people, including family law attorneys, are speaking out against eliminating the alimony deduction, which can save those who pay spousal support thousands of dollars every year.
Based on the rules of the Senate, it doesn't have enough Republican votes to pass its version of the bill because of the significant increase it would have on the country's deficit. Senate Democrats, like their House counterparts, don't support it.
It remains to be seen whether the Senate will amend its bill to remove the alimony and other deductions that the House wants to end, as well as what the final tax reform plan looks like. However, many groups opposed to it, including the American Association of Matrimonial Lawyers (AAML) and the National Organization for Women (NOW) argue that eliminating the deduction wouldn't just hurt those paying alimony, but those receiving it.
They point out that if alimony payments are no longer deductible, people will fight harder to minimize the amount they're ordered to pay. This would likely reduce support for many spouses receiving support -- most of whom are women. AAML's president notes, "The financial security provided to families by spousal support is a valuable resource that needs to be further strengthened and not diminished by our representatives."
Those considering divorce or who have already begun the process should stay up-to-date on whether this provision survives Congressional debate and compromise. Your Rhode Island family attorney can provide more information on how it can impact you, whether you are paying or receiving spousal support.
Source: White House Patch, "House Passes Tax Bill While Its Future Unclear In Senate," Beth Dalbey, Nov. 16, 2017