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Divorcing couples in Kentucky who are already embarking on the process of coming to an agreement on how to split their assets and debts know that there are many factors to take into consideration when making these decisions. One of these factors is taxes. Another may be the payment of spousal support. Some divorce settlements include provisions for alimony that may help offset other losses experienced by a particular spouse in another part of the agreement.

Historically spouses who have had to pay alimony have been able to deduct the amount they pay from their taxable income. The United States Depratment of Labor also explains that spousal support-paying people have also had the ability to tap into their 401K reserves to satisfy these payments and still have been able to avoid the tax liability associated with them.

Both of these things will continue to be true for any divorce agreements signed by December 31, 2018. However, starting the very next day, a new set of rules will be in place. According to CNBC, in 2019, the tax responsibility for money paid out as alimony will shift from the payee to the payor. This may make some people who would have at one time agreed to pay alimony unwilling to do so or it may reduce the amount they are willing to pay. 

The potential change in spousal support terms that may result from the new tax law may also be felt in changes to other parts of a couple’s divorce agreement. The change also pertains to divorce agreements made before 2019 but modified in or after 2019.