When a couple decides to end their marriage, one of the most important things they must determine is whether alimony will be awarded. Alimony, spousal support, or spousal maintenance is usually granted in New York divorces when a dependent spouse requires financial support. The amount is based on one spouse’s ability to pay and the other spouse’s need for financial support. It’s crucial to understand that calculating alimony is unique to each divorce case and the parties involved. Unfortunately, confusion often arises during tax time as payors wonder if they can deduct support payments while recipients want to know if they should claim alimony as income. Please continue reading to learn if alimony is taxable income in New York and how a trusted Suffolk County Alimony Attorney can help you today.
Does Alimony Count as Taxable Income in New York?
Firstly, the Tax Cuts and Jobs Act (TCJA) of 2017 changed how alimony is taxed on a federal level. It has significantly altered the way the IRS taxes alimony. Previously, the higher-earning spouse paying support was required to report their maintenance payments as a tax deduction. The recipient was required to report and pay taxes on alimony payments as income. However, the rules have been modified if your divorce was finalized on or after January 1, 2019. The paying spouse can no longer claim maintenance payments as tax deductions, and the payee can no longer report those payments as income.
Nevertheless, it’s crucial to understand that the TCJA only changed how alimony could be taxed on a federal level. New York state tax law follows the previous federal model. Therefore, according to New York Tax Law, “alimony is subtracted from the payor’s federal adjusted gross income where it will be added to the federal gross income of the payee.” If you’re paying or receiving alimony, your federal and state taxes will likely be calculated differently. This means that the payor can still deduct support payments on their state tax returns, and recipients must add the monetary support they received as income.
Should I consult an attorney?
Regardless of whether you’re the spouse obligated to pay or entitled to receive alimony, it’s critical to retain the legal services of an experienced attorney who can help protect your rights and interests. If you’re the payor, it’s essential to take the necessary measures to ensure you’re not ordered to pay more than necessary. If you’re the recipient, it’s vital to take the steps needed to ensure you receive all the monetary compensation you’re entitled to.
At The Law Offices of Susan A. Kassel, P.C., we are prepared to guide you through this complex legal process and fight to ensure your alimony ruling is given the consideration it deserves. We will fight to ensure the alimony determination is fair and adequate. Contact us today to discuss your case.
