There is a lot of buzz lately about possible changes to the tax treatment of Spousal Maintenance. The silver lining in the spousal maintenance cloud is that the payor can take the amount off their taxes as a deduction. The person who receives the maintenance has had to pay the taxes on it as income.
With the new proposed House tax law, that may change. This makes a huge difference when negotiating a settlement—it is not as palpable without the deduction on the table. Parties may decide that they want to try to negotiate for less maintenance and more child support or different amounts of equitable distribution. It will also be interesting to see what happens in litigated cases as New York recently (in 2016) instituted maintenance guidelines. It is possible that these may be revised if the tax law actually changes. A court may also have to take into account the fact that the moneyed spouse paying the maintenance will no longer get the deduction and therefore the balance will be off a bit.
There are other possible changes to the tax law that may affect divorcing couples—whether litigated, negotiated, or mediated—that they should be aware of. Some of these include changes to the number of years you must own your home prior to selling it in order to exclude the gain from the sale and the ability to provide childcare for children under the age of 13 when their parent is working on a tax-free basis. The proposed new law would tax the benefit provided by the employer as regular income. And even though we always advise our clients to consult a tax preparer or CPA prior to signing an agreement as we do not provide tax advice, that fee may no longer be tax deductible under the proposed new law.
The landscape is ever-changing and new information will be provided to our readers as it becomes available!
Stay tuned next week for information about the recently proposed Senate Tax Plan. Contact me with your questions.
Deborah E. Kaminetzky, Esq.
Kaminetzky Law & Mediation, P.C.
670 Long Beach Blvd., Suite 205,
Long Beach, New York 11561
- Posted by Deborah E. Kaminetzky
- On November 9, 2017
- 0 Comments