How to Avoid Paying Taxes on Alimony by Richard Roman Shum

Описание: How to Avoid Paying Taxes on Alimony by Richard Roman Shum

If you're going through a divorce in New York and trying to understand how spousal support affects your taxes, this video provides valuable information based on current laws and real-world financial planning strategies. Alimony, also known as spousal maintenance or spousal support, plays a central role in divorce proceedings across Manhattan and the wider New York area. This video explores how New York law treats these payments, how recent federal tax reforms have changed the landscape, and what steps you can take to manage the financial impact of both paying and receiving support.

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The Tax Cuts and Jobs Act (TCJA), signed into federal law in 2017, made major changes to how alimony is taxed. For divorces finalized on or after January 1, 2019, alimony payments are no longer deductible for the payor at the federal level, and recipients no longer report them as taxable income. However, New York did not follow this federal shift. Under New York Tax Law § 612(w) (2022), alimony remains deductible for the paying spouse and taxable for the receiving spouse, creating a unique situation where federal and state tax rules do not align.

Understanding this distinction is critical for anyone managing divorce in New York. Whether you are negotiating temporary maintenance while your divorce is still in court or discussing post-divorce maintenance that begins after final judgment, both payment timing and structure matter. Temporary maintenance, also called pendente lite, serves to maintain financial stability during the divorce. Post-divorce maintenance continues after the judgment and often helps the lower-earning spouse transition to independence. Both types have their own considerations under Chapter 14, Article 13, Section 236 of the Domestic Relations Law.

In addition to standard support, this video breaks down strategies for avoiding costly tax mistakes. One key area involves the recapture rule under Internal Revenue Code § 71(f), which penalizes "front-loading" of alimony—when most payments are made in the first three years after divorce. Improper structuring of payments could result in an unexpected tax bill and penalties. Viewers will learn how to avoid this issue through steady payment schedules and careful settlement drafting.

The video also covers options such as lump-sum alimony payments, how trusts may play a role in managing financial obligations, and the impact of filing status on alimony outcomes. For instance, filing jointly or separately as of December 31st can significantly change the tax bracket and the amount of support one might pay or receive.

For those currently negotiating divorce settlements, this video explains how clear financial disclosure, thoughtful agreement terms, and the timing of filing can affect both parties. Alimony decisions carry long-term consequences, especially with New York’s continued use of the pre-TCJA tax model.

If you're in Manhattan or anywhere in New York and want clarity on how alimony may impact your finances, watch this video to better understand the rules, options, and consequences involved. Whether you're paying or receiving spousal support, having the right knowledge can help you make smarter decisions during your divorce process.

For questions about your specific situation or to get help drafting a settlement that takes New York’s tax laws into account, contact the Law Office of Richard Roman Shum, Esq. Call (646) 259-3416 or visit the office at 20 Clinton St FRNT 5D, New York, NY 10002, to schedule a consultation. Take the first step toward securing your financial future today.

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