On the first day of the year, tax reform caused a change in how Massachusetts will handle divorce and alimony. January 1, 2019 marked the first day that alimony is no longer able to be a federal tax deduction. Couples who have finalized their divorce agreement before December 31, 2018 will still be able to make an alimony deduction. However, Massachusetts law has complicated this deadline.
In the past, couples could only file for divorce if one or both spouses could be assigned fault for the marriage’s end. Activities that traditionally allowed for divorce included adultery, abuse, and criminal activity. Today, spouses are not required to have a specific reason for their divorce and no-fault divorces are now the most common way to end a marriage.
No-fault divorce laws began to spread across the nation in the 1970s. When it was Massachusetts’ time to pass no-fault divorce laws, the Catholic church had a significant influence over the state’s lawmakers. This Catholic influence led to what is called the nisi rule. In Catholicism, it is considered sinful to divorce and remarry.
The nisi rule gives couples 90 days to reconcile their marriage after a fault divorce is filed and 120 days after a no-fault divorce if filed. So, if couples decided to reconcile after filing for divorce, they had a window to undo the process entirely.
For decades, the nisi rule has been a quirk in Massachusetts divorce law that has been nothing but an inconvenience and annoyance for couples looking to separate as soon as possible. Now, tax reform has made divorcees unable to deduct alimony payments from their federal taxes.
Alimony is a general term to describe payments made by the higher-earning spouse to the lower-earning spouse after a divorce. Alimony can be a costly experience for divorcees. However, alimony payers have been able to deduct their payments from their federal taxes and experience some financial relief. While the federal deadline to file a divorce and still be able to deduct alimony was December 31, 2018, Massachusetts residents have been forced to deal with the nisi rule once again.
Those who filed a divorce had to do so by October 2, 2018, and those who filed a joint petition for divorce had to file by August 31, 2018 if they wished to deduct alimony from their taxes. Because of the nisi rules, alimony payers may be surprised when they find out that their tax deductions for alimony are not valid—a mistake that could lead to confusion with the IRS in the future!