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Tax Changes Make Some Couples Anxious to Finalize Divorce

Tax Changes Make Some Couples Anxious to Finalize Divorce

26 / February 2019

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Tax Changes Make Some Couples Anxious to Finalize Divorce


Changes to alimony law which take effect in 2019 prompted some couples to rush to finalize their divorce settlements before the new year since the new tax law will no longer allow the paying spouse to deduct alimony payments from his or her federal taxable income. This means that, if the divorce is finalized after December 31st, 2018, the payer could see a substantial increase in taxes. While the receiving spouse is not affected and still has to report alimony as taxable income, the increase in taxes will make it more difficult to settle on a satisfactory alimony amount.

Calculating Alimony

Michigan statutes allow for the courts to require payment of alimony in any divorce proceeding. The intent is to ensure that both parties are adequately provided for. However, alimony in Michigan is not determined with any one set formula, but instead on a case-by-case basis. This makes the calculation of alimony a complicated endeavor, but divorcing couples can simplify the situation simply by coming to an agreement.

Working Together

The easiest path to spousal support is for the divorcing parties to come to an agreement. Ideally, this would be done prior to marriage via a prenuptial agreement. However, even if there is no prenuptial agreement, couples can still agree on an alimony amount in the division of assets as part of the divorce agreement. This means that both parties agree to an amount to be paid to make sure both are adequately supported.

Judgment for Support

If you cannot agree on support payments, the judge will make that determination for you. Alimony judgments will take lots of factors into consideration, including:

  • Behavior and fault for the divorce
  • Length of marriage
  • Career or job skills
  • Division of assets and debts
  • Age
  • Earnings including past contributions to the assets being divided
  • Financial needs, including dependents
  • Health
  • Standard of living
  • Fairness

These considerations ensure that each spouse receives what they need based on their individual circumstances as well as their fault in the divorce.

The judge will also determine how support will be paid. This determination often factors in how long the supported spouse may need support. For instance, how long dependents will be living with the supported spouse or how long a spouse might need to attend school to improve employability. Options include:

  • Lump sum payment
  • Monthly or yearly payment
  • Temporary payment

These payment terms are based on the current circumstances of the parties involved and can still be altered if circumstances change for either spouse.

Limitations and Alterations of Support

It is important to note that alimony payments can be ended by the court if the supported spouse remarries, unless the divorce agreement states otherwise. Either spouse can also request modifications in the payments if financial circumstances change. For example, remarriage by either spouse can result in alterations to the alimony payment amount, as could changes in employment.

Contact a Family Law Attorney

Divorce is difficult enough without navigating the complicated world of alimony on your own. Call the attorneys at Iafrate & Salassa, P.C. today to protect your assets and ensure that you get the support you need.

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