Carol Ann’s Newsletter
June 2018
Table of Contents
1.
If You Are Paying Alimony Get Ready for a Huge Tax Increase
2.
13 Things Never to Say to Your Soon-to-Be-Ex
3.
Humor
1.
If You Are Paying Alimony Get Ready for a Huge Tax Increase
Republicans in Congress, commentators and President Trump often repeat that the middle class will all benefit from the new tax cut law.
[1]
From a family law perspective, that is simply not accurate. There are many middle class and other taxpayers, who are divorced or who will get divorced, who will see a huge tax increase in 2019. That is because under the old law, which was in effect for more than 70 years, alimony payments (also called “maintenance” or “spousal support”) were tax deductible to the person paying the alimony. Under the new tax law, alimony payments made will not be deductible, starting in 2019, for new divorce cases and modification of prior cases. With approximately 1/2 of all US marriages ending in divorce, this tax problem affects millions of people.
Alimony Example 1: Ten Year Marriage
- Ex-Husband is an engineer and earns $70,000 per year, which is $5,833 per month.
- Ex-Wife earns $0 per year. She is a stay at home mom, with children under 30 months old.
- According to the alimony formula in Colorado, the monthly maintenance is $2,333.20 per month for 4 years, 6 months (54 months) (Each state has its own laws for how to calculate maintenance. Colorado law includes an obligation for the Court to consider a formula). Annual alimony/maintenance/spousal support payments: $27,998.40 per year [deductible by Ex-Husband under current tax law].
- Under the new “tax cut” law, $0.00 annually is deductible by Ex-Husband.
- That is a huge tax increase, which is NOT offset by the increase in the personal deduction to $12,000 annual for a single tax payer.
Alimony Example 2: Ten Year Marriage
- Ex-Wife works for Google and earns $120,000 per year, which is $10,000 per month.
- Ex Husband is a teacher and earns $48,000 per year, which is $4,000 per month.
- According to the alimony formula in Colorado, the monthly maintenance is $1,600.00 per month for 4 years, 6 months (54 months).
- Annual alimony/maintenance/spousal support payments: $18,000.00 per year [deductible by Ex-Wife, under current tax law].
- Under the new “tax cut” law, $0.00 annually is deductible by Ex-Wife.
- That is a huge tax increase, which is NOT offset by the increase in the personal deduction to $12,000 annual for a single tax payer.
Alimony Example 3: Ten Year Marriage
- Ex-Husband is self-employed, runs his own business, and after paying all of his business expenses, he earns $100,000 per year which is $8,333 per month.
- Ex-Wife does not want to work, but she has no young children at home. The judge says she is capable of making at least Colorado minimum wage, which is $9.30 per hour, or $19,344 per year full time ($1,612 per month).
- According to the alimony formula in Colorado, the monthly maintenance is $2,366.00 per month for 4 years, 6 months (54 months).
- Annual alimony/maintenance/spousal support payments: $28,932.00 per year [deductible by Ex-Husband, under current tax law].
- Under the new “tax cut” law, $0.00 annually is deductible by Ex-Husband.
- That is a huge tax increase, which is NOT offset by the increase in the personal deduction to $12,000 annual for a single tax payer.
Conclusion
If you are paying maintenance (alimony /spousal support) to your ex-husband or ex-wife, you should talk with your lawyer and your tax advisor to prepare for filing a motion to modify your monthly payment, based on new “tax cut” law.
[1]
The Author is not associated with any political party.
2.
13 Things Never to Say to Your Soon-to-Be-Ex
1. Any sentence that starts with “You will (I will….) never” or “You will (I will)
always
.”
2. Over my dead body…
3. I’ll work until I die before you get a dime of _____” or something that sounds like this.
4. If I have to pay alimony, I’ll quit working.
5. If you get custody, I’ll take the kids and you will never see them again.
6. I’ll destroy/break/smash ____________ before you get it.
7. I’ll tell the kids (parents/friends/coworkers/boss/new girlfriend or boyfriend) the
truth
about you.
8. I’ll cancel all the insurance policies and credit cards.
9. I’ll destroy/break/ruin you.
10. You’ll never get a dime of
my
money.
11. I’ll declare bankruptcy so you won’t get anything.
12. I’ll take the kids and move to __________.
13. I’ll ruin your career.
3.
Humor
These are questions (taken from official U.S. court records) lawyers have put to people on the stand.
Q: You say that the stairs went down to the basement?
A: Yes.
Q: And these stairs, did they go up also?
Q: Have you lived in this town all your life?
A: Not yet.
Q: Do you recall approximately the time that you examined the body of Mr. Edington at the Rose Chapel?
A: It was in the evening. The autopsy started about 8:30 p.m.
Q: And Mr. Edington was dead at the time, is that correct?
