In my opinion, one of the most important changes to Minnesota divorce law in 2018 is the federal tax treatment of spousal maintenance. This occurred as part of the sweeping tax reform bill passed by congress and signed by the president in December, 2017.
Keep in mind, the change will not go into effect until January 1, 2019, but this is something that practitioners and clients need to pay careful attention to in 2018.
Beginning in 2019, spousal maintenance will no longer be tax deductible by the payor. And, it will be taxable deductible to the recipient.
In the past, if you were a person paying spousal maintenance, you were entitled to deduct it on your tax return. If you owed $2,000 per month, you could deduct $24,000 per year. Regardless of your tax bracket, this represented substantial savings. As of 2019, if you are paying spousal maintenance, you can no longer deduct it.
The reason you need to know about this before 2018 is that divorce decrees signed before 2019 that award spousal maintenance will be grandfathered in. For all decrees entered in 2018, the person paying spousal maintenance will still be able to deduct it. The deduction for the payor disappears in 2019. So, if you are thinking about getting divorced and you are likely to owe spousal maintenance, you need to think about whether you want the divorce to be finalized prior to 2019.
Daniel M. Fiskum and Minnetonka Family Law, P.A., are conveniently located in the Carlson Towers at the intersection of I 494 and I 394 in Minnetonka, Minnesota. Call (952) 270-7700 now to schedule a free, in-person divorce case analysis.
