Changes in tax laws may bring surprises to those who pay alimony

Last year, changes were made to the Internal Revenue Code, some of which took effect in 2019. One of the most debated changes involves alimony tax rules. Now that the changes are in place, Florida residents may be in for a few surprises when they file their 2019 taxes next year.

Up until last year, spouses who were ordered to make alimony or spousal maintenance payments to a former — or soon-to-be former — spouse could deduct the amounts paid from their income for tax purposes. Furthermore, recipient spouses were required to include these monies as income on their own taxes. Starting Jan. 1, 2019, the paying spouse can no longer take a deduction, and the recipient spouse is no longer required to report these payments as income.

If a couple finalized a divorce before the end of 2018, then they likely settled under the old rules. However, if agreements were modified after the end of 2018, and the terms of alimony payments were changed, then the current rules may apply. A modification before the end of 2018 would follow the previous rules. Any changes to a previous agreement would need to change the alimony amounts or terms, or specifically state that the new tax rules would be applicable before the 2019 tax code would take effect.

Spouses who have entered into an agreement that requires alimony payments likely have not yet felt the effect that these changes will have on their 2019 taxes. Alimony agreements are often a vital part of divorce settlement negotiations. In marriages where one spouse was the primary wage-earner, a divorce may have a devastating impact on the finances of a lower-earning spouse without the support supplied by alimony or separation support payments. Florida residents who are concerned about how their divorce will affect their financial stability may be best served by working closely with an experienced divorce attorney who can help them reach a satisfactory settlement agreement.

Negotiating alimony in Florid divorce proceedings

For those who are headed for a divorce, the stress surrounding the process sometimes makes it difficult to address difficult topics. One of the more contentious subjects is the matter of alimony, or spousal support payments. Florida residents who are preparing for a divorce may be unsure how to approach the topic without making matters worse.

One of the first things to take into consideration is whether the need for spousal support exists and whether the other party can reasonably afford the payments. In Florida, there are several classifications regarding these monies, and they are based on different factors that may pertain to a given situation. In many situations, these payments are meant to be temporary while a lesser-earning spouse is able to improve his or her financial well-being. Only in rare cases will these payments be ordered to continue indefinitely. 

With these facts in mind, there are ways to bring up the topic of spousal support in a manner that will not increase the tensions of the divorce. One of the first suggestions is to avoid accusatory statements. It’s also helpful to inform a former partner ahead of time that this topic will be discussed. During negotiations, it is recommended that the spouses practice “active listening” techniques while reiterating what one needs. It is also suggested that the request for a set support payment does not exceed a party’s reasonable ability to pay. 

Finally, if these discussions are not fruitful, the spouses may be able to obtain assistance from a neutral third-party mediator before pursuing more aggressive tactics. Parties who are able to peacefully negotiate for the goal of a satisfactory resolution often fare better in the end. Florida residents who are concerned about any divorce-related issues relating to alimony or other financial matters may benefit from consulting with an experienced attorney who can help negotiate a suitable settlement agreement. 

Years-long divorce reopened to seek revised alimony

The end of a marriage is often a tumultuous time that can quickly degrade into fighting and protracted court battles over finances. One of the most contentious disputes during a Florida divorce often involves the matter of alimony. Recently, there have been efforts to reform the alimony laws.

One of the biggest proponents of the reform is a former candidate for Congress whose divorce case took five years to resolve and has been recently re-opened. When the case was settled in 2013, he was ordered to make monthly support payments to his former wife in the amount of $1,500. She had reportedly refused an offer of $5,400 monthly in addition to a $50,000 lump sum. A judge ruled that the amount she would need to cover her expenses was approximately $2,900, but the former husband’s ability to pay was capped at $1,500.

When the former wife noticed how much the man was spending on his campaign, she decided to file for a revised alimony payment as well as seeking arrears payments and attorney fees. A judge recently ordered her former husband to pay her fees in the amount of $20,000 as well as increased alimony payments. He refused and was found in contempt of court.

In an effort to avoid arrest on the contempt charges, he fled to another state, though he has informed the court of his current address and has participated in hearings by phone.  He has stated that he has no intention of returning to Florida as long as the laws remain the same. Lawmakers are trying to institute reforms that would eliminate life-time alimony and would order support to be based on only half of the length of the marriage. In addition, payments would end at retirement. Florida residents who are concerned about their financial well-being in the wake of a divorce may seek the guidance of an attorney who can arrange a settlement that may provide financial stability.

Man discovers alimony cannot be avoided by changing identity

In many marriages, one spouse earns more than the other. For this reason, when a couple divorces, the lower-earning spouse may be granted alimony for a set period of time. Florida residents who are worried about their finances after a divorce may qualify for spousal support to help them until they achieve financial stability.

Recently, one man discovered the hard way that his efforts to avoid paying alimony and child support came with a high price. He has been sentenced to serve 78 weeks in a federal prison followed by three years of supervised probation. In addition, he was ordered to make payments on the arrears that he owes in both spousal and child support. 

According to the prosecutor’s office, the 54-year-old man attempted to apply for a Social Security card in a new name. He allegedly also hoped to obtain a new driver’s license after receiving the Social Security card. His current license was suspended for non-payment of child support. An investigation conducted after he pleaded guilty to one count of fraud revealed that he received a card in 1976 and a replacement in 1987. He purportedly claimed that he had needed a card due to the fact that he was recently barred from an Amish community in another state.

It is unknown how much he owes in either back alimony or child support, but there is a garnishment order stipulating that an estimated $1,950 be withheld from any benefits the man receives. His attorney has filed an appeal after his request for a reduced sentenced was denied by the federal judge. This particular man went to extremes in an effort to avoid meeting his court-ordered obligations. Florida residents who are struggling with their own court-ordered payments may be able to file a petition for modifications. An experienced attorney may be able to provide assistance in these matters.

Alimony may be part of maintaining lifestyle after divorce

On average, an estimated 4,000 divorces are filed every day in this country. Many of these marriages had lasted for years and included an unequal income ratio between the spouses. While states have set guidelines concerning how much alimony should be awarded, the majority, including Florida, do not have an online calculator to help spouses determine an equitable amount.

There are tools that can be used to help couples work through how much alimony might allow both former partners to maintain a lifestyle to which they had become accustomed. Thirteen states offer online calculators to help determine what may be a reasonable amount to make up the difference once the divorce is finalized. Unfortunately, it appears that these calculators are not as accurate as other tools when trying to assess the amount needed to fill the gap between unequal salaries.

One example is a couple who had been married for 20 years and was made up of a spouse who earned approximately $750,000 and a wife who earned an estimated $25,000. According to an alimony calculator, the wife would need approximately $252,000 a year in order to enjoy a lifestyle consistent with the one she had while she was married. The online calculator supplied by the state estimated significantly less, which would not permit the wife to maintain her lifestyle and could negatively impact her retirement plans.

An alimony estimator is a useful tool for couples who are capable of amiable negotiations. If they are unable to come to terms, then a judge may be tasked with ordering an amount that will hopefully meet the needs of the lower-earning spouse. Florida residents who are contemplating a divorce and are concerned about how the settlement agreement will affect their financial well-being may choose to seek the guidance of an experienced attorney who can ensure that their agreement will meet their needs.

Change in alimony tax laws may cause serious financial pain

There has been much discussion concerning the upcoming changes in the tax laws and how they will impact divorce settlements beginning in 2019. The Internal Revenue Code will no longer allow those paying alimony to deduct the payment from their income for tax purposes. While the recipient will no longer have to pay taxes on the amounts received, this is not expected to be a financial win. Florida residents who are concerned about how these changes will directly impact them should consult  family law attorney.  

Many lawyers have expressed their concerns over how the upcoming changes are already affecting divorcing couples. Because the tax changes will generate more revenue for the federal government over the next 10 years, this translates into taxpayers shouldering more of the tax burden. Couples are now rushing to finalize their divorces before the end of the year in order to take advantage of the existing law, which may mean they are making hasty concessions.

It is feared that the change regarding the deductibility of alimony payments will have a negative impact on lower-income families who rely on these payments. Since the paying spouse will no longer receive any tax advantages, he or she will be much less inclined to agree to any alimony. Though more and more women are paying spousal support, it has traditionally been women who suffer financially after a divorce and the new tax laws may only add to the struggles to stay afloat financially.

Many are also worried that children will also be negatively impacted by this change since alimony and child support are often calculated together during divorce negotiations. This could lead to even more pressure for financially-disadvantaged families. The fact that alimony payments will not be taxable income is not expected to bring any relief since overall payments will likely be lower. Florida residents who are worried about how all of these changes will impact their divorce filing may consult with an experienced attorney who can help structure their settlement to best meet their families’ financial needs.

Actress revises request for alimony over shirts

Those who work in the entertainment industry may often feel compelled to maintain a more extravagant lifestyle than those who live more mundane lives. Unfortunately, during a divorce proceeding, there may be more assets and property for these couples to fight over. Florida residents who believe that their spouse’s lifestyle would enable them to provide alimony support are entitled to seek a more equitable division of the marital assets.

Recently, actress Tisha Campbell-Martin submitted a revised alimony request after supposedly obtaining evidence of her former husband’s expansive and expensive wardrobe collection. According to the former Ms. Martin’s petition, her ex-husband is in possession of approximately 500 hand-made shirts that were purchased for an estimated $1,500 per shirt. That would equal approximately $750,000 in clothing assets alone.

Tisha Campbell-Martin and Duane Martin were married for approximately 20 years and raised two children together. The details surrounding their divorce were not disclosed in the recent report. However, Ms. Martin revised her settlement demands after apparently seeing video of the clothing purchases her estranged husband had made.

Campbell-Martin has listed her monthly expenses as being an estimated $33,000. She has claimed assets of an estimated $1.5 million. She is currently not claiming a steady income, though the amount she is requesting in alimony has not been disclosed. Her husband purportedly earns $65,000 monthly and was accused by his wife of attempting to hide and divert assets during the time of their marriage. Florida residents who are struggling to gain access to their equitable share of the marital assets may enlist the assistance of an experienced attorney.

Negotiating alimony takes time, planning and information

Once the decision to file for a divorce has been made, there are many issues that need to be addressed. Two of the most difficult matters to be resolved are child custody and alimony payments. While most states have guidelines for determining child support payments, the issue of spousal support may have many factors that can be taken into consideration. Florida residents who are informed and have a plan may be better prepared for the negotiation process.

One of the first steps in the negotiation process is to have a thorough understanding of one’s finances and what would be required to fulfill one’s needs. This includes having a grasp on future earning capacity and becoming financially independent. Along with outlining one’s needs, becoming knowledgeable about the spousal support laws in Florida provides a framework from which to start negotiating.

Other steps that may help is budgeting for these types of obligations and ensuring that payments are timely. It may also be beneficial to make sure that one has a plan for continuing these payments in the event of unforeseen circumstances or that a missed payment won’t break the budget. In addition, it is recommended that the right to alimony is not waived since the courts will not revisit the issue once it is refused. Furthermore, though it may be tempting to come to an agreement outside of the courts, doing so would make it harder to enforce these types of orders.

Lastly, though there are few experiences in life that are as emotional as a divorce, it may serve a spouse better if he or she can keep emotions in check. Seeking revenge through alimony payments seldom works out well and leads to a more contentious dissolution. Instead, being well-informed about the laws and one’s future needs can help make the process easier. An experienced attorney can ensure that the settlement agreement will help provide a stable financial future.

More women are being ordered to pay alimony and child support

In 1960, an estimated 11 percent of households had a woman as the primary wage earner. Even though media sources have often reported on the wage discrepancy between men and women for comparable employment, more women are becoming the primary provider in many households. Florida residents who are contemplating a divorce may be surprised to learn that more and more women are being ordered to pay alimony and child support.

According to the American Academy of Matrimonial Lawyers, more than 1,600 attorneys were surveyed concerning women paying child support and alimony. More than half reported that they have dealt with such cases. Over the past three years, there has been an estimated 45 percent increase in the number of women who are paying support to their former spouses.

It was not uncommon in the past for the wife to either stay home or hold a lower-paying position while her husband earned substantially more during the marriage. If they divorced, the man was often ordered to make alimony payments as well as child support. Society has seen a shift, however, in the number of women who are earning more than their partners. Though some women may attempt to counter that their spouse was underemployed during their marriage, a judge is still inclined to order the higher-earning spouse to help support the other after a dissolution.

One woman argued that her monthly alimony payments were being used to support her husband’s addiction to adult websites. The former husband’s lawyer countered, successfully, that it was part of his entertainment expenses, which was considered a permissible expense. Florida residents who are concerned about issues surrounding alimony or other support obligations may be best served by consulting with an experienced attorney who can provide assistance in securing a settlement agreement that best meets one’s needs.

Candance Parker, WNBA star, settles alimony with one-time payment

Those who play professional sports are likely accustomed to having their private lives exposed to media scrutiny. As such, when these individuals seek a divorce, the settlement details, including any alimony agreements, often become public knowledge. Florida fans who follow basketball news may have been surprised when WNBA star Candace Parker was ordered to make alimony payments to her former spouse.

Parker reportedly made a decision to offer her former spouse of 10 years, Shelden Williams, a one-time lump payment of approximately $400,000 rather than make regular payments over the designated period of time. Because Williams was a star player for the NBA, fans may have been surprised that Parker, whose net worth was estimated to be around $2 million, was ordered to make such payments. Her former husband reportedly earned approximately $12 million during his career.

Other terms of their divorce settlement included dividing the assets from the sale of the couple’s home, which was recently sold for approximately $3.75 million. The couple also agreed to a joint child custody plan for their 8-year-old child. Neither parent was ordered to make child support payments as they purportedly agreed to share the expenses of raising their daughter.

It is unknown why Parker was ordered to make alimony payments, though fans of Williams reportedly supported the decision. There were no details released concerning the amount of monthly support Parker would have been required to pay if she had not arranged to make the one-time payment. Florida residents who are seeking a divorce of their own may have many questions regarding the financial aspects of any settlement agreements. In order to secure the best agreement possible, residents may be best served by consulting with an experienced family law attorney who can provide valuable insight and guidance throughout the entire process.

Source: atlantablackstar.com, “Why WNBA Star Candace Parker Is Paying Husband Alimony“, Kiersten Willis, April 20, 2018