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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 career as a lawyer in Cheyenne, Wyoming. First gaining experience as a law clerk for the district court judges, Mr. Hutchins entered private practice with a Cheyenne firm focused on civil litigation, business law and some general practice law. 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 the broad reach of municipal law. Mr. Hutchins returned to Cheyenne to represent the State of Wyoming in the national tobacco arbitration. While in that position, he developed the consumer protection unit for the Wyoming Attorney General's Office. He led over 120 investigations and enforcement actions in Wyoming and worked on numerous joint cases with the Federal Trade Commission and other states, including Colorado. Mr. Hutchins relocated to Colorado in 2016 and founded Harmony Law. Mr. Hutchins has established Harmony Law in three principal areas of law. First, it is a general practice firm in the areas of business law, estate planning and family law. Secondly, it is a civil litigation firm, practicing law in state and federal courts throughout Wyoming and Colorado. Finally, it is one of the few firms in Wyoming or Colorado that focuses on consumer protection law.

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