Earlier this year, this Colorado-based family law blog discussed how maintenance may be addressed during a divorce. Maintenance is the payment of support from one former partner to their ex, and maintenance may last for a varying amount of time. Whether maintenance will be awarded in a particular divorce will depend on many factors that are unique to the divorcing couple.
However, readers who are in the process of settling their divorces and working out maintenance agreements should know that a big change is on the horizon for how maintenance is viewed under the tax laws. As of now, a person who pays maintenance to their ex may deduct the amount they pay from their taxable income and lower their tax basis. After December 31, they will no longer be able to do that.
This change only applies to individuals who finalize their maintenance orders and agreements after the start of the New Year. If a person has an operating agreement now, or finalizes their agreement or order before midnight on December 31, then they will be allowed to follow the previous treatment of maintenance under the now-operating tax laws. However, once January 1 rolls around, anyone with an unfinished maintenance plan will be subject to the new tax rules.
Money can be a big issue in a divorce, and paying maintenance to an ex can be a massive expense. Tax considerations and other factors should be evaluated carefully by those who are ending their marriages. Discussing one’s concerns about these and other divorce-related topics with a family law attorney is an important part of staying ahead of problems as one works toward ending their marriage.