Manhattan Spousal Support Attorney Richard Roman Shum Offers Insight on Avoiding Alimony Tax Pitfalls

Divorcing couples in New York often find themselves facing the twin challenges of emotional stress and complex financial obligations. At the heart of many of these financial issues lies alimony-referred to in the state as spousal support or maintenance. Manhattan spousal support attorney Richard Roman Shum, Esq. (https://www.romanshum.com/blog/how-to-avoid-paying-taxes-on-alimony/) offers critical insight into how individuals can navigate alimony payments without facing unnecessary tax consequences.

Richard Roman Shum, a Manhattan spousal support attorney, emphasizes that understanding the intersection of alimony and taxation is vital for anyone entering divorce proceedings. In New York, alimony payments are still tax-deductible for the payer and taxable for the recipient, even though federal laws changed in 2019. This discrepancy between state and federal rules can lead to unexpected financial burdens if not handled with care. As Shum notes, "With thoughtful guidance, our attorneys can assist you in making informed decisions that protect your financial well-being during and after your divorce".

For anyone working through these issues, guidance from a Manhattan spousal support attorney is more than just helpful-it's essential. Richard Roman Shum points out that both temporary and post-divorce maintenance have distinct tax implications, and the courts may adjust payments based on how they affect each party. Under the Tax Cuts and Jobs Act (TCJA), the payer can no longer deduct alimony payments on federal returns, and recipients don't report them as income-if the divorce was finalized on or after January 1, 2019. However, New York continues to operate under the old framework, leading to dual compliance challenges.

According to Richard Roman Shum, working with a Manhattan spousal support attorney means approaching these complications with strategic clarity. Shum explains that judges in New York maintain the discretion to adjust standard alimony formulas when strict application would create an unjust financial result. This flexibility allows courts to consider each party's tax burden and the larger financial picture. Shum's legal strategies often focus on tailoring spousal support in a way that minimizes both short-term strain and long-term fiscal instability.

One of the critical strategies discussed by Richard Roman Shum is the importance of structuring alimony to avoid what is known as "front-loading." This occurs when large payments are concentrated in the first three years following a divorce, which can trigger a tax recapture by the IRS. Shum warns that if alimony drops by more than $15,000 from one year to the next during this period, the payer may face a surprise tax bill. To prevent this, it's important to spread payments evenly and label them properly in the divorce settlement.

Another viable approach offered by Richard Roman Shum is opting for lump-sum alimony payments. While federal tax rules may exclude these payments from taxable income for the recipient in post-2018 divorces, New York treats them differently. The state taxes the lump sum as income for the recipient and allows a deduction for the payer. Shum advises his clients to anticipate this outcome and include it in their financial planning to avoid surprises.

Legal tools such as trusts and prenuptial agreements can also help manage the tax effects of alimony. Richard Roman Shum explains that these instruments offer a way to define and structure payments clearly, often resulting in more favorable tax treatment. Trusts, in particular, can deliver income while potentially reducing overall tax liability, while prenuptial agreements can set boundaries before any conflict arises.

For recipients of alimony, Shum emphasizes the need to understand how the income will affect their New York state taxes-even if federal taxes no longer apply. Strategic planning around estimated payments and deductions related to medical or educational expenses can make a big difference. In addition, tax filing status plays a key role. Whether someone files jointly or separately at the end of the year impacts their tax bracket, which in turn can affect how alimony is calculated and taxed.

Richard Roman Shum also outlines the importance of timing in finalizing a divorce. Because filing status is based on one's marital status as of December 31st, when the divorce is finalized during the calendar year matters. Filing as a single person versus married filing separately can alter tax brackets and, by extension, influence the perceived need or ability to pay alimony.

When it comes to negotiating alimony agreements, Shum emphasizes the need for transparency and professional collaboration. Full financial disclosure is vital to ensure that no party is left bearing a disproportionate tax burden. Working with divorce mediators and tax advisors alongside legal counsel can make the difference between a fair agreement and long-term financial strain.

Richard Roman Shum encourages divorcing spouses to consult with his team before finalizing any alimony terms. "Properly considering the tax implications of alimony can help you avoid unexpected financial burdens and create a more stable future," he explains, underscoring the value of legal foresight in family law decisions.

Individuals navigating divorce in New York stand to benefit greatly from professional advice that takes both state and federal tax law into account. Whether the goal is to minimize taxes through payment timing, structure, or legal instruments, these decisions require clear guidance. Richard Roman Shum offers this guidance through personalized legal strategies rooted in the realities of life after divorce.

To avoid preventable tax burdens and secure a fair financial path forward, divorcing spouses are encouraged to speak with the Law Office of Richard Roman Shum, Esq. about how alimony might impact their future.

About the Law Office of Richard Roman Shum, Esq:

The Law Office of Richard Roman Shum, Esq. serves clients throughout Manhattan with a focus on family law and spousal support. Led by Richard Roman Shum, the firm delivers straightforward, strategic legal solutions tailored to the individual needs of each client. Richard Shum brings a personal, detail-oriented approach rooted in his commitment to equitable outcomes for families navigating divorce and related financial matters.

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