November 1, 2018 | Published in Spousal Maintenance
Under the new tax code effective January 1, 2019, spousal maintenance awards entered in 2019 and later will no longer be deductible by the payer or taxable to the receiving party. In the past, parties were at times more amiable to settling spousal maintenance issues as the paying party was generally in a higher tax bracket and could thus receive a larger benefit compared to the tax burden realized by the receiving party. Thus, the paying party was often more likely to pay a bit more in spousal maintenance knowing that he/she effectively would only have to pay 50% – 60% of such amount after tax effecting such award, while the recipient may only have to pay 15 – 25% based upon his /her tax bracket. Under the present (soon to be old) tax code, judges generally consider the tax ramifications when awarding spousal maintenance, which will not longer be necessary under the new code. Although the new tax code will not provide the benefits described above, the Court’s and the IRS’s job will be much easier. Unfortunately, settlement of spousal maintenance issues may be more difficult under the circumstances.
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William D. Bishop is the founder of Bishop, Del Vecchio & Beeks Law Office, P.C., with over 30 years of legal experience. He is a Certified Family Law Specialist by the State Bar of Arizona and a Fellow of the American Academy of Matrimonial Lawyers. Recognized among Arizona’s top 50 attorneys by Southwest Super Lawyers, Mr. Bishop has consistently been listed in Best Lawyers in America for Family Law since 2018. He holds an AV Preeminent Peer Review Rating from Martindale-Hubbell and actively contributes to the legal community through leadership roles and educational initiatives.
William D. Bishop