This topic involves the changes to the spousal maintenance statute in Colorado. Colorado has a very unique statute that deals with spousal maintenance. It’s found in Colorado revised statute 14-10 114. And this statute was passed on January 01, 2014 to provide the court with advisory guidelines that take into consideration a number of factors in a court’s decision as to whether or not one party should receive spousal support from the other party. This law formally called those kinds of support payments alimony. In many states in the country it’s still called alimony, but in Colorado we call it spousal maintenance or spousal support.
As a result of Congress passing a massive tax bill in 2017, as of January 02, 2019 there will be an impact to the Colorado spousal maintenance statute. Under the way that the law is written now, spousal maintenance paid by one party to the other is considered to be a tax deduction to the spouse that’s paying spousal maintenance and must be declared as income to the spouse who receives the support payment.
As of January 02, 2019, that’s no longer going to be allowed. So, Colorado has a new law that will take into consideration the definitions of gross income of the parties in adjusting the spousal maintenance that must be paid if there is a ruling by the court or an agreement by the parties.
There’s two parts to spousal maintenance in every case that you need to consider. Does the spouse who is requesting spousal maintenance have a need? That’s called necessity, for economic support. And does the spouse that is being asked to pay spousal maintenance have the ability to pay?
So, there are a lot of factors that go into this including how debts are to be paid, how property has been divided, whether there is any income producing property to either party. It’s very wise to consult with a lawyer and possibly a CPA to see how this is going to impact you and your taxes.
The other thing that I want to emphasize is this: for marriages that are going through divorces in 2018, before the new law kicks in on January 01, 2019, if you have a signed written agreement as to the amount and duration of spousal maintenance and it is approved prior to January 01, 2019, then the spouse paying spousal maintenance will be allowed to claim the deduction for everything that is paid in spousal maintenance and the spouse who is receiving the maintenance will be required to report it as income. As long as it’s done before January 02, 2019.