What to know about spousal support and taxes

| Jan 4, 2021 | Divorce

Spousal maintenance is the name given to the payments one spouse may need to pay to the other as part of a divorce settlement in Indiana. The court will order these payments when necessary to help a divorcee with financial hardship resulting from the end of a marital union.

Who pays spousal maintenance?

Either spouse can petition the court to receive spousal support during divorce proceedings. Courts adhere to strict guidelines when deciding whether one spouse will become responsible for providing support to the other. A court may consider ordering support if:

  • The spouse requesting the support battles physical or mental limitations that make it difficult for them to support themselves.
  • The spouse requesting support is not a property owner and is the custodial parent of a child with mental or physical disabilities.
  • The spouse requesting support needs education or training to find employment.

Tax implications

Divorced individuals paying spousal maintenance as part of a divorce decree signed on or after January 1, 2019, will not be able to deduct these payments for tax purposes. This fact is important to consider when divorcees are negotiating the terms of a divorce.

The support one spouse pays to another made the paying spouse eligible for a tax deduction for divorces finalized by the last day of 2018. However, the Tax Cut and Jobs Act put an end to this tax deduction. Likewise, the spousal maintenance payments made to an ex to support children is not deducted from tax responsibilities.

Divorce settlements often impact the financial future of newly divorced individuals years after marriage dissolution. It helps divorcees to arm themselves with as much knowledge as possible regarding how each settlement provision will affect them in the future. A family law attorney may be able to provide some guidance on these issues.

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