Attorneys’ Fees, Alimony, And The New Tax Law In Washington State
Last month, I wrote an article discussing how The Tax Cuts and Jobs Act affected spousal support. The article briefly outlines how the tax status of alimony changed to tax-neutral. Therefore, under the new tax law, alimony is no longer a tax-deductible expenditure, nor can it be considered income for recipients. This alteration not only affects the tax status of alimony, but also the tax status of legal fees.
Under the old tax code, legal fees regarding alimony proceedings were also considered tax deductible. A recipient spouse who sought Court intervention to ensure he or she continued receiving maintenance as ordered may have been awarded attorney’s fees in the action, but many times the amount awarded by the Court is less than the amount of attorney’s fees actually incurred. In consideration of that, the old tax law permitted that spouse to deduct the attorney’s fees that were actually incurred in the action.
This is no longer the case. The tax status of legal fees may not change regardless of the year in which the divorce was set to occur. If you have attempted to enforce or modify a pre-2019 alimony or spousal support award and incurred legal fees because of those proceedings, the legal fees may not be tax deductible. Additionally, legal fees incurred to obtain a QDRO distribution also may not be tax deductible. The Court may certainly award fees incurred in these actions, but it is important to know that this benefit know longer exists when deciding whether to file an action.
Divorces bring difficult times, and the proceedings that occur as a result of divorces are not easy to endure. At Beresford Booth our lawyers hold extensive divorce experience and have proven capable of making difficult times easier on those involved. We would be delighted to use this experience to help you in any and all divorce matters.