HB 18-1385

HB 18-1385 is a Colorado bill that adjusts how spousal maintenance (also known as alimony) is calculated and taxed after federal tax law changes in 2017. Before these changes, the person paying spousal maintenance could deduct it from their taxes, while the recipient had to pay taxes on it. Starting in 2019, neither party can claim this for tax purposes anymore. The bill updates Colorado's guidelines for calculating spousal maintenance and child support to reflect these new federal tax rules, ensuring fairer calculations without the old tax implications affecting the amounts awarded. Since the status of the bill is "signed," it has been approved by both houses of the state legislature and signed into law by the governor, meaning its changes are now in effect.

Official Summary

Prior to the enactment of federal tax legislation in December 2017, spousal maintenance was capable of being classified as deductible by the payor spouse for federal income tax purposes and taxable income to the recipient spouse. As a result of the 2017 federal tax legislation, commencing in 2019, spousal maintenance is not deductible by the payor spouse and is not taxable income to the recipient spouse. The guideline advisory amount of maintenance in statute, and the definitions used for calculating gross income and adjusted gross income for maintenance and child support awards, reflects the anticipated tax consequences to the payor and recipient under prior law. The bill adjusts downward the advisory guideline calculation of the amount of maintenance in circumstances where the maintenance awarded is not deductible by the payor spouse and is not taxable income to the recipient spouse. The bill also amends the definitions of 'gross income' and 'adjusted gross income' to properly reflect the tax implications of maintenance obligations. In addition, the bill adjusts the definitions of 'gross income' and 'adjusted gross income' in calculating child support obligations to reflect the tax implications of maintenance obligations. (Note: This summary applies to the reengrossed version of this bill as introduced in the second house.) , Read More

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