Changes ahead for spousal maintenance payments in 2019

People in New York who get a divorce that is finalized in 2019 may end up paying more in spousal maintenance than if their divorce had been finalized in prior years. The tax bill passed in December 2017 changes how spousal maintenance is treated regarding taxes, and some attorneys say they are getting a surge of calls from people who were previously undecided about divorcing.

At present, spousal maintenance is tax-deductible for the payer. For a person who pays $20,000 each year in spousal maintenance and is in the 33 percent tax bracket, this represents a savings of around $6,400. The receiver then pays taxes on the spousal maintenance received. Starting with divorces finalized in 2019, the payer will no longer be able to deduct spousal maintenance on taxes. The person who receives spousal maintenance will no longer have to pay taxes on the amount.

Since people will no longer be able to access the savings from the spousal maintenance deduction; their attorneys might push for spousal maintenance payments to be smaller to make up for this. However, those who receive spousal maintenance may benefit from no longer having to pay taxes on the payment. Therefore, some of them might make an effort to delay finalizing a divorce until 2019.

Spousal maintenance payments are not always permanent. A person may only be ordered to pay support for a certain amount of time or until the other spouse can retrain for a better-paying job. Child support is separate and usually lasts until a child is 21. People who are concerned about their financial situation after divorce, including whether or not they will receive spousal maintenance, might want to talk to an attorney about the situation. The attorney may be able to review the person’s financial situation and offer advice about how the divorce is likely to proceed.