Update on Divorce and Tax Law

//Update on Divorce and Tax Law

Update on Divorce and Tax Law

Update on Divorce and Tax Law by Deborah E. KaminetzkyNow that the new tax law is official, this is what it means for divorcing couples:

First of all, alimony or maintenance as we call it in New York, will not be deductible by the payor for any agreement executed after December 31, 2018. Note that the divorce judgment does not need to be signed—only the agreement needs to be executed. This means that 2018 may be a very busy divorce year. People who have been thinking about it may be more likely to take action knowing that it may be more expensive later on.

Secondly, when New York State came out with the maintenance guidelines a couple of years ago, the guidelines were based on the fact that the maintenance would be deductible. The fact that we have a whole year until executed agreements are included under the new tax law means that New York State may want to consider revising those guidelines to reflect the new law. Otherwise, there will be more litigation as the payor spouse will not want to sign an agreement they feel is grossly unfair. We practitioners used to be able to “sweeten” the deal by letting the payor know that they would get a tax deduction and soon that will not be a reality.

Thirdly, when discussing financials, child support, maintenance and its tax treatment is normally taken into account. Now that maintenance will have a “tax neutral” treatment, those calculations will need to change as well.

You might think that the receiver of maintenance will be pleased that they no longer have to pay income tax on their maintenance; however, they presumably paid the tax on a lower income. Now tax will be paid on the payor’s higher income. So, overall, there will be less money for the family.

How the new tax law may affect you depends on a lot of factors. Always check with your CPA prior to taking any action which may have a tax implication to be sure that you are making an informed decision.

Deborah E. Kaminetzky

 

Deborah E. Kaminetzky, Esq.
Kaminetzky Law & Mediation, P.C.
132 Spruce Street
Cedarhurst, New York 11516
Phone: 516.374.0074

By | 2018-01-05T18:04:48+00:00 January 5th, 2018|Divorce Law|Comments Off on Update on Divorce and Tax Law

About the Author:

Deborah E. Kaminetzky is the founding member of Kaminetzky Law & Mediation, P.C. located in Cedarhurst and Garden City, New York. Prior to starting the firm Deborah worked at a Long Island firm where she learned the practice of Matrimonial and Family law and Estate Planning. Deborah has also worked at the New York City Department of Consumer Affairs where she was responsible for prosecuting unlicensed home improvement contractors and negotiating settlements for consumers. Prior to practicing law, Ms. Kaminetzky was the president of a commercial property management corporation in the New York Metro area. Ms. Kaminetzky is a member of the American Bar Association (General Practice, Solo and Small firm Division and Law Practice Management Sections), National Association of Divorce Professionals, New York State Council on Divorce Mediation, Family and Divorce Mediation Council of Greater New York, New York State Bar Association (Business Law, Estate, Family Law, ADR and General Practice Sections), Nassau County Bar Association (where she serves as Vice Chair of the General, Solo and Practice Management Committee, and is active in the Community Relations and Education Committee) and The Nassau County Women’s Bar Association. Ms. Kaminetzky was appointed to the Committee on Law Practice Management of the New York State Bar Association in 2015 and has been a frequent speaker and author of articles for their journal. Ms. Kaminetzky serves on the Board of Directors of the Yashar Attorney and Judges Chapter of Hadassah as a their Treasurer, and was their Woman of the Year 2012. Deborah graduated from New York Law School in 1991 and the University of Michigan, Ann Arbor in 1986. Ms. Kaminetzky was admitted to the First Department in 1991 and the United States Supreme Court Bar in February of 2015. Deborah is on the Matrimonial fee dispute arbitration panel for Nassau County. She expanded her alternative dispute resolution practice by completing a Mediation certificate program in December of 2013, an advanced Mediation certificate program in 2015 and most recently a Divorce Mediation certificate in early 2016 from The New York Peace Institute. Ms. Kaminetzky has spoken to various groups on topics including matrimonial law, technology and social media use, and disaster preparedness for business including cybersecurity.