Divorce, alimony and taxes: What you need to know

Jessica Menton USA TODAY FEB. 10, 2020

https://www.usatoday.com/story/money/2020/02/10/taxes-2020-divorce-alimony-child-support-tax-rules-have-changed/4680569002/

For recently divorced Americans, alimony payments are no longer tax-deductible for the payer, and they aren't considered taxable income for the person receiving them, ending a decades-long practice. The changes affect divorce agreements signed after Dec. 31, 2018. Divorce, “can have a pretty meaningful effect on the outcome for individuals’ incomes,” says Katie Prentke English, co-founder of Harness Wealth, a New York-based digital platform that helps individuals find financial, tax, and legal advisers.

The tax changes benefit people receiving alimony in most cases, according to tax professionals, because they are no longer required to claim alimony as income and won’t pay tax on it. It could also affect social programs that alimony recipients qualify for since their income will appear lower than it actually is. If they're not required to report alimony income for health care, their income will be lower and they could potentially get a better subsidy, experts say.

The tax code changes will also affect IRAs. When a spouse paying alimony transfers funds from their individual retirement account to use as alimony payments, those funds will no longer be taxed upon withdrawal, according to English. The receiving spouse will then pay tax on that money once they receive it.The new rules could restrict how alimony recipients stash money away for retirement.“For recipients, alimony payments can’t be invested into an IRA, which can be problematic for a partner who’s not working and all of their income comes from alimony,” English says.

That letter from the IRS could be fake:Watch out for this tax scam and others in 2020

The new tax law also affects divorce expenses. Spouses can no longer deduct legal fees or any expenses related to divorce like they could before. Those are now considered personal expenses under the law. And child support payments aren't deductible by the payer or taxable to the recipient.

Prior to 2018, filers were allowed to take dependency exemptions for children. But those exemptions can no longer be used. Parents had previously been able to claim a dependency exemption for each child they supported, which worked like a tax deduction by reducing their taxable income.But there's still good news. A person with children under 17 may still be able to claim the Child Tax Credit for $2,000 per child, according to David DuFault, an attorney at Charlotte, North Carolina-based Sodoma Law. And if a parent is still supporting a child over 17, they could claim a dependent credit for up to $500, he says. A tax credit is generally better than a deduction because a deduction only reduces your income, whereas a credit will reduce the tax you owe, DuFault explains. "People need to make sure they're taking advantage of those child tax credits since we don't have dependency exemptions anymore," DuFault says. “Be aware of any terms in your separation and divorce documents that address who can claim these credits and when

JUDICIARY HEARING HELD JULY 23, 2019

I want to thank all of you who were able to make the time to attend the Public Hearing this past Tuesday, July 23. There was over 40 people attending to show support and most of all to urge the Committee Members to move the alimony Bills forward with a favorable recommendation. There was no organized group testifying in opposition.



The Public Hearing before the Joint Committee on the Judiciary was the NEXT and most important step in the Legislative Process.

It is interesting to note that Senator Brownsburger and Senator Creem left the Hearing with obviously no interest in listening to the testimony from advocates of the Alimony Reform Bills.



January 22, 2019

Three Identical Bills Titled: An Act Reforming Alimony in the Commonwealth

- S 935, H 1467 and H 3393

Bill H 740 (filed in 2017) was originally drafted by the Alimony Reform Task Force as a "Legislative Correction " to the SJC's misinterpretation of the intent of the Alimony Reform Act of 2011. The Members of the Alimony Reform Task Force, who enthusiastically approved both the Alimony Reform Act of 2011 and the "Legislative Correction" (S 935, H 1467 and H 3393) were appointed by the Chairs of the Judiciary because of their positions on the Mass Bar, Boston Bar, Woman's Bar, American Academy of Matrimonial Lawyers, Chief Justice of the Probate and Stephen Hitner (MAR). The group also included several Legislators. When the ARA of 2011 was brought before the Senate, it received accolades from Senator Creem, Senator Candaras, and Senator Eldridge. The Act was approved unanimously by the Senate. In 2018, H 3088, also known as H 740, was approved unanimously by the House. When the Bill got to the Senate, it was killed by Senator Will Brownsberger on August 9, 2018, who referred to the Bill as "Chaff".

While it is not understood why the Bill was not allowed a vote in the Senate in 2018, our goal is to hit the ball out of the park in 2019. THE BILLS and SPONSORS Rep. Christopher Markey

Representative Sheila Harrington HD 3393* ________ House Minority Leader, Rep. Brad Jones HD 1467* _______ Senator Paul Feeney

SD 935* _______ * These are "Docket Numbers". An official BILL NUMBER will be assigned after BILLS are sent to the JUDICIARY COMMITTEE. Now that we have Sponsors, it is critical to get as many Co-Sponsors as possible to show support. YOUR ACTION PLAN The co-sponsorship period will be open for two weeks from now until Friday February 1, 2019.





Step 1: Communicate! "Support H.740 To Fix Court Revisions"

Let your House and Senate members simply know that you want their support for Bills S 935, H 1467 and H 3393, a bill to provide a technical fix to the court's 2015 decision. H.740 was sponsored by 40 Massachusetts senators and hose members.

What S 935, H 1467 and H 3393 Does and Does Not Do.

Does: Allows all alimony payers the right to file a complaint for modification with the Massachusetts Probate & Family Court to terminate alimony payments based on their ex-spouse's cohabitation, the durational guidelines of the Alimony Reform Act [the "Act"], and reaching the age for full retirement under Social Security regardless if their marriage ended prior to March 1, 2012.

Does Not Do: S 935, H 1467 and H 3393 is not an automatic termination of alimony. While the alimony payer has the right to file for modification with the court, the filing does not grant an automatic end to alimony payments. Under the Alimony Reform Act, reaching the Act's durational limits shall be deemed a material change of circumstance to be considered by the court. However, the court will only grant alimony termination if the court finds that deviation from those limits is warranted for good cause and such cause is in writing.

Does: The burden of proof to continue alimony payments after the durational limits of the Act rests with the alimony receiver after the payers' filing of a modification with the court. The alimony receiver must meet specified conditions -- in accordance with the Act -- to continue receiving payments from their divorced, alimony-paying spouse. Such conditions shall be considered by the court.

Does Not Do: Similar to the durational limits, cohabitation does not result in an automatic termination. A complaint for modification must be filed with the court. The payor must meet the burden of proof whether the alimony should be reduced, suspended, or terminated.

Does Not Do: Non-modifiable separation agreements are not changed by H.740 or the Alimony Reform Law. "No existing alimony judgment under this section where the parties have agreed in writing that the existing alimony judgment survives or is not modifiable shall be modified by a court without the consent of both parties."

Step 2: Tell Your Legislators to Support Passage of All Three Bills.

The best way to get a bill passed into law is encourage your House and Senate members to support the bill

To get started, click the link for your State legislator contact information. We recommend calling your legislator directly, rather than initially sending an email. Use an email to follow-up on the call, and then to keep following up.

Please contact Steve Hitner and arrange a meeting with your legislators, so that Steve can bring his supporting information on a) why the Bill is needed, b) the history of the Bill, and c) why supporting the Bill is necessary now.

Steve Hitner

Divorce Coach, Consultant, and Mediator

President, Mass Alimony Reform

Member, 2011 Alimony Reform Task Force



508-335-0069

Steveh [@] usdivorcemediation.com

Step 3: Support mass Alimony Reform with time and donations

Also, please support the Alimony Reform efforts with your time and a donation. Your donation offsets the cost of printing the legislative briefing notebooks, parking in Boston, and other expenses to get the Bill introduced and passed into law.