The recently enacted federal Tax Cuts and Jobs Act (TCJA) eliminates the tax deduction for spousal maintenance (alimony) payments on your federal income tax return beginning January 1, 2019. Historically, spousal maintenance payments have been deductible by the spouse making the payment and includable as income to the spouse receiving the payment.
Starting January 1, 2019, the exchange of spousal maintenance payments will be a tax neutral transaction on your federal income taxes just like the payment/receipt of child support. This change in the law will not affect parties who have signed divorce settlement agreements in place by December 31, 2018. However, if an agreement is finalized or modified after January 1, 2019, the tax deduction is eliminated.
Most importantly, New York State is not following this federal change. Accordingly, those who pay spousal maintenance will still be able to deduct those payments from their NYS income and those who receive spousal maintenance will still be required to report the payments as income on the New York State income tax return.
Contact the attorneys at Trevett Cristo as soon as possible for further information.