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Tax Code Changes Affect Divorce planning from 2019

Posted by Clyde Hutchins | Feb 20, 2019 | 0 Comments

Prior to this year (2019) maintenance (formerly called alimony) was tax deductible by the person paying the maintenance. It was taxable income for the person receiving it. This all changed on January 1, 2019.

Now, maintenance will no longer be tax deductible for the one paying it. And maintenance received will not longer be taxable income for the one receiving it.

This puts pressure on the higher income spouse to pay less maintenance because there is no longer a deduction. I doubt it will have much impact on the lower income spouse's efforts to obtain maintenance, especially in Colorado where the state has established presumptive guidelines for maintenance.

The takeaway from all this is to scrutinize divorce settlement proposals from every angle, including the tax angle. Check with your tax specialist to see your whole financial picture when negotiating the numbers in a divorce. You might find that seeing the actual tax burden will impact your decision making.

About the Author

Clyde Hutchins

Clyde Hutchins is the founder of Harmony Law. Mr. Hutchins started his legal career in Cheyenne, Wyoming as a law clerk for the district court judges. Mr. Hutchins then entered private practice with a Wyoming based litigation and business law firm. Later, Mr. Hutchins went to Alaska, where he was the chief litigator for a firm that engaged in bond law, corporate law, securities law, and municipal law. The State of Wyoming hired Mr. Hutchins from Alaska to represent the State of Wyoming in the national tobacco arbitration and act as its tobacco settlement attorney. While in that position, as a hobby, he developed an enforcement unit for consumer protection for Wyoming residents. Mr. Hutchins moved to Colorado in 2016 and founded Harmony Law, LLC. Harmony Law is primarily engaged in civil litigation. It is also a general practice firm in the areas of business law, estate planning, consumer law and family law. Harmony Law is active in all state and federal courts throughout Wyoming and Colorado.

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