Is Alimony Taxable?

Alimony is a payment, typically paid from the higher earning spouse (the paying partner) to the lower earning spouse (the receiving partner). This payment is meant to help the lower earning spouse be independent and self-supporting.

When you’re going through a divorce, the tax implications probably aren’t what you’re focused on. However, the taxes you pay on alimony can be important to your own personal finances and budgeting. Because the rules on alimony being taxed have recently changed, it is important to know the ins and outs of the IRS’s rules for alimony, also known as spousal maintenance in Colorado.

Is Alimony Taxable?

Whether or not you pay taxes on alimony depends on if you are the paying partner or the receiving partner. If you are the paying partner, your payments are NOT tax deductible. Your taxes will be calculated with your entire income, pre-alimony payments. If you are the receiving partner, your alimony payments will NOT be taxed as income. You will be able to retain the entirety of your alimony payment, even after taxes. It is important to note that the policy on taxed alimony is separate from the policy on taxed child support. Child support is never taxed in the state of Colorado.

The Exception to the Rule

While alimony is taxed currently, it wasn’t always that way. Prior to 2019, alimony was tax deductible for the paying partner and taxed as income for the receiving partner. If your alimony agreement was entered prior to the change in legislation, you will be grandfathered in. This means that if your alimony agreement was entered before January 1st of 2019, you will be subject to the previous legislation. In this case, if you are the paying partner, your alimony payments will continue to be tax deductible. If you are the receiving partner, your alimony payments will continue to be taxed. If you’d like more information, you can read it straight from the IRS here!

How We Can Help

Divorce Matters attorneys are well-versed in every aspect of divorce, including alimony. We can help you understand your options, whether you’re just starting out in the divorce process or if you need to change your current alimony arrangement. If you have any questions regarding your current alimony

arrangement, give us a call at (720) 386-9176 or click here!

How Do I Modify My Divorce After It Has Already Been Completed?

It is possible to modify a divorce after it has been finalized. This process is known as Post-Decree Modification. But how does it work?

Proving Need

The first step to modifying your divorce decree is proving that your circumstances have changed. When the court finalizes your divorce, it is expected that you and your ex-spouse will abide by the terms and conditions that you, your ex, and the court have agreed upon. However, the State of Colorado recognizes that there may be circumstances in which the terms and conditions of the divorce will need to change! If you want to modify your divorce decree, you will have to prove to the court that there is a “substantial and continuing change in circumstances”. For example, if you were paying child support and lost your job (and have difficulty finding another one), the court would likely agree that you have had a change in circumstances.

What Types of Modification Are There?

You can modify various aspects of your divorce, but the most common modifications relate to spousal maintenance (also known as alimony), child support, property division, and parenting time and responsibilities.

How Do I Get Started?

To modify your divorce decree, you will have to file a Motion to Modify. This motion will be specific to what aspect of the divorce decree you wish to modify. Because of this, the easiest way to get started is to hire an attorney at Divorce Matters!

What Types of Law Does Divorce Matters Practice?

Just from our name, it’s easy to tell that we excel in divorce law, but what other kinds of cases can Divorce Matters handle? We are a law firm specializing in family law. Family law covers a wide variety of different cases including:

Adoption

Estate Planning

Divisions of Marital Property

An important part of the divorce process in Colorado is figuring out how to divide marital property. The procedure generally involves two steps. First, it must be determined what marital property is. Second, the marital property must be divided equitably

Spousal Maintenance

In Colorado, neither spouse has an automatic right to maintenance. The court may award maintenance only if it finds that the spouse seeking maintenance lacks sufficient property to meet their reasonable needs and, in addition, is either unable to support themselves through appropriate employment or should not be required to seek employment because of child care responsibilities. Divorce Matters has lots of experience in Spousal Maintenance negotiations and our attorneys are the perfect choice to help you!

Child Custody

When children are involved, the divorce process doesn’t end once the final paperwork is filed. With children come often contentious and painful negotiations about and modification of parental rights, parenting time, and custody. Our team has deep experience dealing with child custody and parental rights issues and we believe it is our duty and an imperative to help couples address custody and rights issues in ways that reduce the impact of divorce and protect children in the process.

Child Support

In Colorado, child support is based on strict guidelines dictated by state laws and statutes. The issue of child support is separate and distinct from the issue of parenting time, and child support payments may not be conditioned upon parenting time. Due to these strict laws, it is important to have guidance from an expert attorney throughout the process.

Post Decree Modifications

Have your circumstances changed since your divorce? Have you lost your job? Has your ex-spouse received a salary increase? Did your ex-spouse fail to disclose financial matters during the dissolution of marriage? Once your divorce is finalized, fortunately, not everything in your original separation agreement or parenting plan is set in stone. Courts recognize that circumstances change, and, sometimes, spouses hide income or assets during the divorce process. Depending on the exact circumstances of your case, you may have a variety of options post-decree. In the following sections, we explore your options in modifying maintenance, child support, parenting time, custody, and decision-making, as well as how you can reopen your property division.

Mediation and Arbitration

Mediation and arbitration are perfect options for anyone going through a divorce. Both options allow the partners to take more control in the divorce, as well as keep the process out of court. Not only does Divorce Matters represent clients through mediation and arbitration, but we also have a mediator on staff!

Domestic Violence

Domestic violence happens to people in all classes, statuses, and ranks in life, regardless of age, gender, race, religion, education, profession, or socioeconomic status. The unfortunate reality is that one in four women in the U.S. will experience domestic violence in their lifetime, resulting in an estimated 1.3 million women becoming victims of physical assault by an intimate partner each year.

Contempt of Court

After having gone through a divorce or once you have some orders from the court, you may at some point find yourself on either end of a contempt of court action if one of the parties is not complying with the orders. If you find yourself on either end of a contempt action, Divorce Matters is here to help!

Unbundled Legal Services

Unbundled legal services are the perfect solution for anyone not ready to jump into full-scale representation. With unbundled services, you can hire an attorney at their hourly rate to help you with specific aspects of your legal troubles, like filing paperwork or gathering documents!

Common-Law Marriage

The state of Colorado allows couples to enter into common law marriage. However, the parameters of common law marriage can be hazy and difficult to understand, just like common law divorce

Appeals

If your case falls under family law, we can help with your appeal!

Prenuptial Agreements

While there are a million things to plan when a couple decides to marry, often the most difficult to discuss with your future partner is the possible need for a prenuptial agreement. While this subject is not the most romantic or exciting part of wedding planning, a couple contemplating marriage in Colorado may need to consider entering into a prenuptial agreement, or a contract before marriage.

Military Divorce

To thank our Military service members, we even offer 10% off of legal fees! This discount is offered to all active and retired service members, veterans, and military spouses.

Thomas Legal Firm

While Divorce Matters only deals in family law, we do have a sister law firm that offers other services. Thomas Law Firm deals with Criminal matters as well as Civil Law matters, including general litigation, civil rights, workers’ compensation, and business defense litigation.

Will I be Affected by Changes to the 2021 Child Tax Credit?

Recently it was announced that under the American Rescue Plan Act the expanded Child Tax Credit would be distributed differently in 2021. This year, half of the tax credit will be distributed on a monthly basis beginning in July and the other half will arrive with your 2021 tax refund. While this tax credit is a welcomed relief for many families who are struggling to make ends meet, it also spells confusion for most folks who are going through or already divorced.

How will this tax credit be distributed if I am divorced?

The Child Tax Credit can only be claimed on one tax return, so if you are divorced or filing separately this means that only one parent will be able to claim the tax credit. A court order or separation agreement will name the person eligible to claim the tax credit, this is typical whichever parent has primary custody. There are several ways a 50/50 custody arrangement might address this, for example, some may choose to file with the tax credit every other year.

Can the courts rule that this year’s tax credit be split?

In most cases, the courts will follow whatever was agreed upon in your separation agreement or court order. However, this is not the end of the line if you wish to treat this year’s tax credit differently. For example, if your ex claims the tax credit every year but you are able to come to an agreement with them that you will file for the tax credit this year, you can file an IRS Form 8332. This form is a right of tax benefit transfer, which would allow you to claim for this year. Please be aware that it is important you check with your attorney first before moving forward with anything that deviates from your separation agreement. We also suggest seeking out a tax professional for help with filing your taxes.

Can the tax credit payments be garnished for child support if I am behind on my payments?

Per the American Rescue Plan Act, this tax credit is not subject to garnishment meaning you will receive the full amount from the government. However, this does not protect that payment from garnishment or levy once the money is in your bank account. Another consideration is that while it won’t be garnished when distributed when you file your taxes at the end of the year it may be subject to offset.

What do I do if the tax credit was claimed by my ex, but I was supposed to claim it this year?

The best way to handle this is to get in touch with your attorney. They will be able to help you chart the best course of action, whether that be reaching out to negotiate with your ex and coming to an amicable resolution, or filing a motion of contempt with the courts.

If you have questions, please reach out to one of our experienced attorneys today.

This Is How The Divorce Process Works and How Long It Will Take

When it comes to divorce most would say they want the process to be over as soon as possible so they can move on with their lives. This inevitably leads everyone to ask “how long will it be until I am officially divorced from my spouse?” A great place to start is our Divorce Timeline, which can be found under the Tools tab on our website. However, we also want to give a more general overview of how long the process might take. The specific circumstances and complexity of your case will determine the timeline, but overall, this is what you can expect the process to look like.

 

When You First File-

 

Once you have filed a Petition for Dissolution of Marriage with the courts in your county, your spouse must be personally served.  Learn more about what to do if you are the one being served divorce papers.

Once your spouse is served, he or she has 21 days (35 for out of state) to file a response. If you and your spouse both want the divorce and sign a petition jointly, the Service/Response step can be ignored. Your spouse may also agree to waive service if you do not file jointly. Just because you sign jointly does not mean the process is complete, and you will still need to follow the rest of the requirements in the process.

 

Once Your Ex Is Served-

 

You have 42 days after the date of filing to set up an initial status conference with the court and submit your financial disclosures. The initial status conference is your first court appearance and is an informal way for both parties and the Court to get on the same page about dates and deadlines in your case. It depends on the county and jurisdiction that you are in as to whether they will schedule a time for your initial status conference automatically once you file, or if you or your attorney have to reach out to the court to schedule your own. The timing for this solely depends on your county’s court and its timeline. You also will need to have your financial disclosures submitted within that 42-day deadline as well.

 

After Initial Status Conference-

 

You have the option to file for Temporary Orders, which is only necessary if there is an immediate conflict that must be addressed while your case is ongoing. Temporary Orders can help with decision making, child support or spousal support, or who will live in the marital residence during the divorce process. Temporary orders will be replaced by permanent orders at the end of your case. A temporary orders hearing, which is a separate court date, must be set to decide this and it will extend your case.

 

Once you’ve had your initial status conference, you and your spouse are then required to attend mediation by the state of Colorado. Everyone who files for divorce in Colorado must attend mediation, with a few exceptions. In rare cases where the parties agree to every issue, it is possible to skip mediation, which would shorten your case. Additionally, you may request mediation be waived in cases of domestic violence.

 

Mediation-

 

Mediation is a formal settlement conference where the mediator (whom you hire) assists in trying to reach a full agreement between you and your ex. If mediation is successful, you will leave with a signed or partial settlement agreement. Then your attorneys draft the final agreements and file the documents with the court.

 

If mediation is not successful, you must either come up with a settlement or prepare to go to trial. If you need to go to trial, this must be scheduled with the court and the timing completely depends on their availability and timeline. This can extend your case; therefore, it is ideal to come up with agreements in mediation or a settlement.

 

Finalized-

 

Your divorce will be finalized once a judge issues a decree of dissolution of marriage which then severs the marriage, and you are no longer married.

 

Post-decree-

 

If a party is not satisfied with the final decision made by the court, then an appeal can be made. There are specific time constraints around appeals, so you will want to speak with your attorney if you wish to appeal any part of your divorce decree.

 

You also may modify certain orders put in place by the courts if circumstances change after the final agreement has been made. Again, you will want to speak with your attorney if you would like to modify any documents or orders post-divorce.

 

Overall, it can be difficult to determine the exact length that it will take to finalize your divorce because every situation is different. Your timeline will depend on the specific circumstances and jurisdiction of your case.

If you have questions about your particular situation or would like to speak with an attorney today, contact us.

What is a Post-Decree Modification?

Divorce is a complicated process that is often fraught with emotions and challenges, and one most people want to get through as quickly ”“ and as unscathed ”“ as possible. For many couples who separate and/ or divorce, once their case has progressed through the court system and the final divorce decree has been issued, they believe that all is said and done, all decisions are final, and nothing will change. However, after a divorce settlement agreement is reached and made official by a court in a final divorce decree, it can be modified as circumstances change. This is known as a Post-Decree Modification, or Post-Decree Motion. These motions are filed when a legally separated or divorced couple takes part in post-decree litigation, which means the parties involved are in disagreement about issues after the final divorce decree has been issued and are headed back to court to resolve these issues.

Quite often these disputes are precipitated because one of the parties involved determines that the other party has violated a court order relating to the divorce. An example would be when the party responsible for paying court-ordered child support or spousal support fails to do so. Another valid reason for seeking a post-decree modification involves challenging the financial settlement based upon a failure to disclose debts or assets or concealing information that should have been produced. The parties may attempt to work out their differences on their own but if that fails, the injured party may have to file legal paperwork usually known as a contempt action requesting that the court enforce the original order.

What Issues are Handled with a Post-Decree Motion?

Child support, custody, and visitation arrangements are commonly the subject of a post-decree motion. This can be due to a number of factors including a physical move to a new location, a new marriage for one or both of the parents, a significant change in financial status, living conditions, financial need of the child, and above all, the best interest of the child or children involved. If the agreed upon parenting plan is not working and needs to be modified, parental responsibilities, parenting time/visitation, schooling, health care, and other issues can be subject to change. Attempts to alienate or isolate a child or children from one parent by another is also just cause for a post-decree modification request.

Alimony, also known as spousal support or spousal maintenance, may also be subject to change due to a change in employment, involuntary loss of job, change in living conditions, remarriage, substance abuse, arrests, or incarceration, a deteriorating mental or physical condition, or other factors. A judge will closely examine the details of the case and determine if anyone is attempting to avoid paying court-ordered alimony or if the requested changes are legitimate and worthy of consideration.

The objective of a post-decree modification is to revise an existing final divorce decree so that it accurately reflects the lives and needs of those it represents, both adults and children. However, circumstances and conditions change all the time, and your original divorce decree may need modification because it does not accurately represent your current situation. Depending on the circumstances of your divorce case, you may have a variety of post-decree options. If your circumstances have changed since your final divorce decree was issued and you would like guidance and help in filing a post-decree modification in Denver, the legal offices of Divorce Matters are open and ready to assist you. Reach out to us today and let us help you achieve an arrangement that meets your current needs.