As this blog has discussed on a previous occasion, courts in Missouri can and often will order one spouse to pay another periodic sums in order to balance out the relative economic earning power of a couple who is coming out of a divorce or permanent separation.
These spousal maintenance payments, also commonly referred to as alimony, get decided based on a number of factors. Sometimes, a Kansas City resident may wish to agree to pay alimony as part of a negotiation in exchange for some other benefits.
At other times, the opposite is true, and someone who is otherwise likely to receive alimony will forego that option in exchange for something else, such as a favorable property division.
For divorces finalized through the end of this year, that is December 31, a person who agrees to pay alimony may be able to deduct those payments from her federal tax returns. On the other hand, the person receiving such payments must report the same as income for federal tax purposes.
This rule has been in force for a number of years, and it has been credited for inducing people to agree to pay alimony since there was a tax benefit to doing so. Starting in 2019, however, there will be no tax deduction allowed for alimony payments.
It is important for Kansas City residents to be aware of this significant change, as it could affect how much they are willing to pay in alimony, assuming it is still in their best interest to do so after 2019. Some may even wish to try to finalize their decrees before the end of the year in order to get the benefit that is currently in force.