How The New Tax Law Affects Alimony Payments, Part II

In our previous blog, we talked about the new tax law. Beginning January 1, 2019, the spouse paying alimony won’t be able to take a tax deduction, while the spouse receiving alimony will no longer have to report it as income.

How this may affect modifications to judgments made in 2018 or earlier remains to be seen. That’s why in this series, we are reviewing the reasons for a modification in spousal support.

In the last blog we discussed what constitutes an unanticipated or substantial change. In the second part of the series, we’ll define what the purpose of a spousal support award is and what part it plays in the modification process.

There are three types of spousal support, each with its own purpose: transitional support, compensatory support and spousal maintenance.

  1. For transitional support, the judge reviews what support is necessary to help the spouse get an education or training to re-enter the job market.
  2. With compensatory support, the judge decides what repays a spouse for major financial contributions to the education, career or earning ability of the other spouse.
  3. For spousal maintenance, a judge considers what support is appropriate to keep a standard of living similar to what existed during the marriage. This support may last for a specific amount of time, or permanently.

For all three types of support, several factors affect the final decision. Along with unanticipated life changes or alterations to income, differences in the purpose of the award could result in modifications to spousal support.

Changes to support agreements are complex, and may become more complicated with the new tax law. Each circumstance is different, and needs the expert eye of a trusted law firm. The team at Landerholm Family Law has watched the tax law carefully and is prepared to help with your support agreements now, and after the law takes effect.

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