Tax Reform And Spousal Support: What You Need to Know in Ohio

Tax Law Effects on Spousal Support in OhioIf you are currently involved in a divorce or thinking about one, and a possible issue between you and your partner is likely to be spousal support (“alimony”), pay close attention to the new federal law on the subject.

Here’s why.

Due to the tax reform measures which Congress passed on Dec. 22, 2017 the laws concerning spousal support have changed. One Ohio attorney described it as “one of the most controversial changes in family law in decades.”

Brief description of old and new alimony law

Under previous tax laws, in place for more than 70 years, alimony was deductible by the partner who paid it. The partner who received spousal support could claim it as income. As of January 1, 2019, the spouse who pays alimony cannot deduct it on his or her federal income tax forms and the spouse who receives spousal support no longer has to pay taxes on it.

Is the new law a bad thing? The answer to that question probably depends on which side of the table you are sitting on in the divorce situation and your financial situation throughout the divorce process. Those already paying alimony will likely not be affected by the new law (unless state law on the issue would change).

Why has the law been changed?

According to the Associated Press (USA Today, Dec. 24, 2017), the IRS is trying to improve its strategies for dealing with discrepancies in reported tax figures—discrepancies which allegedly bring less money into the government. The IRS contends that in past years the amount of spousal support deductions claimed far exceeds the amount of spousal income reported. (USA Today).
For example, Internal Revenue Service figures for 2015 showed 178,000 persons receiving spousal support and 361,000 taxpayers claiming a total of $9.6 billion in alimony. (AP)

The AP says Congress’s Joint Committee on Taxation claims repealing the spousal support reduction will bring in $6.9 billion in new tax revenue over 10 years. (That is less than one half of one percent of the $1.5 trillion tax plan passed this past December.)

The previous tax law permitted a divorced couple to achieve a better tax result than a married couple, according to the AP. Members of the House Ways and Means Committee, who wrote the new tax law, called the previous alimony deduction “a divorce subsidy” (AP).

Critics of the new tax law claim that without the deduction, higher-earning spouses, who in the past may have borne the greater tax burden in a divorce, may not pay as much to ex-spouses as they did under the old law. A higher monthly support amount is probably easier for most ex-spouses to pay if they know they will get some relief at tax time.

It is also speculated the new tax law will affect some divorce property settlements as support payments are sometimes used in negotiations to offset larger property settlements.

The new tax reform law could also decrease the number of divorce cases resolved by settlement and private negotiation (AP).
If parties are unable to reach a private resolution of their differences, the court can order alimony be paid on the basis of income disparity. The seriousness of this effect on a divorcing partner is also something that may depend on which side of the table he or she is sitting on. In general, many family law experts say the new law may hurt the partner with the lower income and could make divorce more drawn out and more expensive.

The National Organization for Women opposes the tax reform spousal support change. Among the organization’s reasons for not supporting this part of the new income tax reform law are Census Bureau figures which indicate 243,000 people received alimony in 2016 and 98% of them were women.

In Ohio, what are legal considerations influencing how much spousal support you may have to pay OR how much you can expect to receive?

Ohio Revised Code 3105.18 addresses spousal support and what the court must consider before awarding either partner in a divorce temporary or permanent support during and after a divorce. Some of these factors are:

  • The relative earnings of the parties;
  • The ages and the physical, mental and emotional conditions of the parties;
  • The retirement benefits of the parties;
  • The duration of the marriage;
  • The standard of living the parties established during the marriage;
  • The relative extent of the education of the parties and the contribution one party may have made to the education of the other;
  • The income of the parties from all sources.
  • And any other factors that the court deems relevant in awarding spousal support such as the parenting arrangement, and the time and expense necessary for one partner to acquire needed education or training.
  • There are several different types of spousal support that a Court in Ohio can award to a spouse. In general, a party will be required to pay one year of spousal support for every three years of marriage. (See section on post-divorce later in this article). Permanent or indefinite spousal support could be ordered by a court in an extremely long-term marriage, but this is rare.

What is temporary spousal support in Ohio?

Temporary spousal support is granted by a domestic relations magistrate at an initial hearing called a “temporary orders hearing.” This occurs shortly after the initial divorce complaint is filed. This type of support is granted when it is necessary for one spouse to cover living expenses and their share of the marital bills while the divorce is ongoing.

However, just because temporary spousal support is granted at the initial temporary orders hearing, this does not necessarily mean that spousal support will be granted to the requesting spouse after the divorce is final. Temporary support can be used for anything deemed appropriate during the divorce process. For instance, if your spouse has moved out of the marital home and you are stuck with trying to pay all of the marital bills, the Court may award temporary support so you can pay the mortgage, utilities, insurance payments, attorney’s fees and other regular bills that accumulated during the marriage.

What is post-divorce spousal support?

If you are in need of spousal support after your marriage is terminated, it may be very important to retain an attorney who can build a case for you and get you the financial support you need. This becomes particularly important if one of the partners to the marriage is voluntarily unemployed or underemployed.

Domestic Relations courts in Ohio are courts of equity. This means that the Court wants to make sure that if either spouse is awarded spousal support, the award is fair and equitable and both spouses will be able to afford their regular expenses after the marriage has ended.

Many courts in Ohio, for example those in Summit County and the surrounding counties, employ “a 1/3 rule.” This awards spousal support for one third of the length of the marriage (i.e., if you were married for 15 years the court may award you spousal support for five years).

The length of time can vary based on the particular circumstances of your particular case. Also, the previously mentioned factors which are statutorily considered in Ohio when spousal support becomes an issue in a divorce, can also be of importance in a spousal support decision by the Court.

If spousal support may be an issue in my divorce, do I need an attorney?

According to family law experts on a national scale, the main issues in divorce and dissolution are child support, spousal support and property settlements. Spousal support can be an important component in many divorce negotiations as well and, as this article previously mentioned, taxes, both federal and state, cannot be ignored. More simply stated, spousal support is a hot button topic in many divorce proceedings today.

Every case of dissolution or divorce brings with it a different set of details and circumstances. If you would like to learn further information about how spousal support could affect you in a divorce, please contact the experienced domestic relations attorneys at Slater & Zurz LLP.

The old adage “what you don’t know can’t hurt you” may not apply in a divorce case, especially if you are not skilled at navigating the intricacies of a tax document. Whether you are a fan of the new tax law, or not, it is worth considering what its implications can mean for your pending or impending divorce, specifically those actions which may not be concluded before the end of 2018.

Splitting up with a partner who you been married to for some period of time is a very traumatic and stressful time for most. But it’s also a time to be wearing your thinking cap. You do not want to come out of a possible domestic relations battle as the financial loser.

Knowledgeable attorneys, like the domestic relations lawyers at Slater & Zurz LLP, can guide you through this potentially very painful time in your life. The law firm has offices in Akron, Canton, Cleveland, and Columbus and a domestic relations attorney from the law firm can arrange to meet with you anywhere in Ohio. There is no obligation to you to retain an attorney from the law firm and we do not put a time limit on our FREE initial consultation.

Call Slater & Zurz at 1-888-774-9265 to learn more about the possible legal implications of divorce and spousal support. Ask for a domestic relations attorney or speak with one of our 24-hour live chat representatives.

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