Tax Law Changes Regarding Spousal Support, Effective January 1st, 2019

General

On January 1st, 2019, there was a major change to how maintenance — also called spousal support or alimony depending on what state you live in — and tax law interacts. The legal reform has made it so maintenance payments are not tax-deductible by the payer. Furthermore, the recipient spouse does not need to include received maintenance as income on their tax returns.

Previously, the paying spouse could count maintenance payments given as a valuable and cost-saving deduction on their taxes, and the receiver had to count it as income. The January 1st, 2019 update has effectively turned the situation completely around and has eliminated the tax benefit. Nontaxable maintenance payments means the recipient spouse (usually the lower-earning spouse) will be able to fully utilize the amounts given to them each month, without paying taxes on it. On the other hand, paying spouses (usually the higher-earning spouse) are more likely to feel a financial impact with the elimination of a significant deduction. As a result, paying spouses will likely offer a lower amount of monthly support.

Please note: The legal update only applies to spousal support agreements created or orders issued on or after January 1st, 2019. The preexisting legal and tax rules will still apply for divorce decrees with a provision for maintenance before the effective date. The same is true for parties who have a fully executed and acknowledged separation agreement before the first day of 2019.

Legal Support for Your Spousal Support Agreement

Are you intimidated by the new legal updates for maintenance? Are you worried your spousal maintenance plan for your upcoming divorce could become problematic as a result? Come to Wisselman, Harounian & Associates, and speak with our Long Island family law attorneys about the road ahead. With 150+ years of total legal experience, you can trust in our team to know the ins and outs of your case, as well as the best way to uphold your interests in divorce.

To arrange a free case analysis, call (516) 773-8300 at your first convenience.

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