If you file for divorce after December 31st, 2018 you will not be able to deduct maintenance (alimony) payments on your taxes as part of your divorce agreement. Currently if you are a spouse paying alimony you can deduct payments from your taxes. The spouse that receives the maintenance must pay income tax on the maintenance received.
You will no longer be able to claim a $4050 exemption per dependent child. In Montana we use a complex child support calculation to determine child support. Historically, parents have negotiated which parent claims their child(ren) for the exemption. This exemption affects the overall child support calculation. Under the new tax bill the personal exemption is gone.
The child tax credit has been expanded. This year, for example, single parents were only able to receive the $1,000 credit per child if they make less than $75,000 per year. The credit is a dollar for dollar reduction of tax owed to the IRS. Under the new tax bill, a single parent can receive $2,000 for every child under 17 if the parent makes less than $200,000 per year. Additionally, there is a new $500 credit for children over 17 and other adult dependents (elderly parents or an adult child with a disability).
The 529 Savings Accounts can be used in new ways. Many parents establish 529 Plans for their children as part of their divorce negotiations. Historically, parents can invest pre-tax dollars in the 529 Plans to be used for college expenses. Now, parents can use up to $10,000 per year to cover the cost of sending a child to a “public, private or religious elementary or secondary school.”
The tax penalty for health insurance has been eliminated. Over the past few years, parents have been able to receive a credit on their child support calculations for paying for their own health insurance (since this was a mandatory expense). In the new tax bill, the individual mandate will be eliminated in 2019. Therefore, for Montana child support calculations, parents will no longer be able to deduct the cost of their health insurance from their overall income available for child support. We should expect overall income for child support to increase, which will affect child support calculations.