How Will Spousal Support Affect My Taxes?

Divorce can be a difficult and turbulent period in a person's life. Whether your divorce was contentious or amicable, navigating through the changes brought about by ending a marriage is no easy feat. From figuring out how to divide assets equitably to strategizing how to secure your future financial well-being, the decisions you make during divorce have long-term implications that must be carefully considered.

It's also important to understand how your divorce settlement will impact your taxes, especially when it comes to spousal support, which is also known as alimony. Whereas in the past, spousal support payments were taxable to the recipient and deductible by the payer, this is no longer the case if you were divorced in 2019 or later.

Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act of 2017 brought about a major change in the taxation of alimony payments. This law eliminated the ability for payers to deduct spousal support payments from their taxes. This marked a shift away from the previous model, which allowed payers to reduce their taxable income by deducting alimony payments.

Instead, if your divorce is finalized after December 31, 2018, the payer can no longer claim spousal support payments as a deduction and payees no longer need to report alimony payments as taxable income. If you were divorced before that date, you will pay taxes according to the previous model, unless your settlement agreement was modified after December 31, 2018. If you and your spouse modify spousal support terms after this date, you should include terms that specify whether you are adopting the new model or maintaining the pre-2019 tax requirements.

How Do Ohio Courts Decide Alimony?

In Ohio, alimony can be either temporary or permanent and is typically granted when one spouse has a need for assistance and the other spouse has sufficient resources to provide it. The court will consider many factors in deciding whether to grant spousal support, including:

  • The length of marriage
  • Each party’s income and earning potential
  • Any assets acquired during the marriage
  • Health issues that may impact employment prospects
  • Contributions made by both parties during the course of the marriage
  • The standard of living during the marriage
  • If one spouse worked as a homemaker and has a decreased earning ability as a result
  • Any other factors the court considers relevant

Marriages lasting less than three years are usually not eligible for spousal support; however, this isn't always true if special circumstances exist such as disability or illness preventing one partner from working or contributing financially to their family unit. It's important to keep in mind that the court has broad discretion when it comes to awarding spousal support, and it can often be better for both parties to come to an amicable agreement rather than litigate the issue in court. Regardless, it is important to consult an experienced divorce attorney who can help ensure that your interests are protected throughout the process.

Call Crossman & McNamee LLC Today

It is not uncommon for those going through divorce to feel overwhelmed or uncertain about their financial future. That’s why it’s important to have experienced legal representation on your side during this time. At Crossman & McNamee LLC, we understand how difficult this process can be and we are here to help you navigate through this every step of the way.

Contact us online or call us at (937) 468-3796 to schedule a consultation.