If you have ever been through a divorce, you know that it can impact your life in many ways. It forces you to split one household into two. You’ll have to split assets and share custody of your children with your ex-spouse. If you aren’t working, you’ll be forced to get a job to support yourself. You may be forced to pay alimony and/or child support. Your life will no longer be the same.
Alimony refers to court-ordered payments as part of a divorce settlement. There are two main types of alimony in Maryland: rehabilitative or indefinite. Rehabilitative alimony is only available for a set amount of time. It may be one year, two years, five years or more. The goal is to financially support the spouse until they complete education or get a good-paying job so they can be self-supporting. Indefinite alimony has no end date and is often seen in long-term marriages where one spouse did not work.
Alimony can be complicated whether you are the payor or the recipient. That’s due to the new laws that affect 2019 taxes. In the past, alimony was considered taxable, which means that payors could deduct their payments on their taxes. Also, those who received alimony would have to claim the money as income. This benefit made it so people would be more willing to agree to alimony.
However, because of the Tax Cuts and Jobs Act, things have changed. The payment is no longer tax-deductible. Likewise, the recipient is no longer required to report this as income. These changes are for divorce finalized in 2019. If your divorce was finalized in 2018, then the changes would not apply.
Under the new law, alimony must meet the following requirements:
In addition, the payment cannot be considered child support and it cannot be payable after the recipient’s death. Also, the payor and the recipient cannot live in the same household.
There are a lot of details involved, so if you pay or receive alimony, it’s important to understand the laws. This is necessary come tax time. Fortunately, you have until July 15—three extra months—to file your taxes this year. Make sure your alimony is included properly to avoid an audit, increased tax liability or other penalties.
Contact a Maryland Divorce Lawyer Today
Taxes are complicated enough, and with the changes to alimony that will affect 2019 taxes, things will be even more challenging for divorced filers. Make sure you understand how these changes will affect you when it comes time to file your taxes.
If you have been recently divorced, you may be confused about your taxes. You’re not alone. The Columbia divorce lawyers at the Law Offices of Todd K. Mohink, P.A. can help. Schedule a free consultation today. Call our office at (410) 774-5987 or fill out the online form. We have two offices to serve you.
Resource:
forbes.com/sites/forbesfinancecouncil/2020/04/01/how-changes-to-divorce-and-alimony-taxes-may-impact-you/#523e4a20410c
https://www.marylandlawhelp.com/petty-things-that-can-end-a-marriage/
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