On January 1, 2019, the new Federal Tax Laws will impact the issues around divorce. For many years, the payment of maintenance (support to the lesser-earning or non-earning spouse) was a tax deduction to the Payor Spouse and was considered income to the Payee Spouse.
As of January 1, 2019 under Federal Tax Law, maintenance payments shall no longer be deductible to the Payor nor shall they be considered, for Federal tax purposes, income to the Payee.
However, the statute, that provides the Temporary Maintenance Calculation Guideline, which is a mathematical formula to determine how much the Payor spouse will pay to the Payee spouse for maintenance has NOT yet been modified.
This has thrown the Matrimonial Bar into a bit of chaos in it’s attempting to resolve fairly the impact of this Federal Tax Law change on divorcing parties. It also put Judges in the position to have to decide whether and how they will “tax impact” maintenance awards during litigations.
To add to this confusion, New York State does allow a state deduction for maintenance to the Payor and does consider those maintenance payments income to the Payee.
At Mediation Associates, we have developed healthy negotiation strategies to deal with the tax changes, placing this information in the hands of our clients along with editorial guidance from several Certified Public Accountants.
It is our goal to deal with the changes in a manner that is fair to both parties – and we have been able to do so thus far in 2019.
Come talk to us about it. We will assist you in resolving this.
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