TCJA Accounting: Now That Spousal Support Is Not Taxable Or Deductible On Federal Tax Returns, Should New York State Maintenance Guidelines Be Changed?

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The formula created to determine the New York Spousal Support (Maintenance) Guidelines was created on the assumption that the calculated support would be fully taxable to the recipient and deductible to the payor. Two years after this formula was implemented, the federal government passed legislation that would no longer make spousal support in all 50 states a taxable event (for example, these payments would no longer be taxable or deductible). Yet New York State has not revised its formula to reflect this change. This is important because this change in law could theoretically increase or decrease the amount of child support under the 50% formula. This article will look at what, if anything, should be done about this change.

The purpose of court-determined post-divorce support is to “balance the effects of divorce by considering the earning capacity and future needs of each spouse and providing financial support to the spouse who is more economically dependent” . Jennifer L. McCoy, Spousal Support Disorder: An Overview of the Problems with Current Spousal Support Law, 33 Fla. St. UL Rev. 501, 502 (2005). Currently, 45 states have laws in place to provide this type of support (see Justin T. Miller, Tax reform could make divorce much more taxingABA, Oct. 11, 2019), but the laws differ both in the types of support awarded and in the factors courts consider in determining the duration and amount of support.

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