Tax Law Change For Spousal Support

As of January 1, 2019 the new tax law does not permit the deduction from income for payments of spousal support, maintenance or alimony unless the obligation existed prior to January 1, 2019 pursuant to a written divorce settlement agreement, separation agreement or divorce decree.  Likewise, the same money is no longer reported as income by the recipient spouse.

Anybody whose spousal support obligation existed before January 1, 2019 is protected or to say it differently, the new law does not change the right to deduct or the obligation to report previously order or agreed to maintenance payments.  So if you were divorced prior to the above date or if the judge issued a support obligation before that date, the payments are not changed by the new law.

As a result of the tax law change there was a flurry of activity by people who were divorcing in 2018 to reach a final agreement before the law changed.  Now that the tax law has changed the question remains whether judges will consider the fact that the NY State Legislature has not modified the formula for maintenance calculations due to the loss of the deduction for the paying spouse.  Presumably when the NY maintenance formula was created it, in part, recognized the deduction to the paying spouse.  While the effect of the deduction is different in each case as people are in different tax brackets, nevertheless it was known that there would be some savings to the paying spouse.

For now, until the maintenance formula is changed or the courts determine how to handle this new problem, the best argument is still to argue that one of the factors utilized to determine maintenance is the tax effect on the paying and recipient spouse.  It may be necessary to have expert testimony at a trial and at a minimum a statement from an accountant as to the net effect of the deduction or reporting of income to each spouse so that at least the court will know the impact caused by the tax law change.