2018 Tax Consequences: the payor of spousal support must pay FICA on the spousal support obligation. The recipient must pay state and federal taxes. Iowa Support Master will perform the calculations for you.
2019 Tax Consequences: the payor of spousal support must pay all taxes, including FICA, on the spousal support obligation. The payor may no longer deduct the amount being paid. The recipient pays no taxes or FICA on spousal support received come January 1, 2019.
Spousal Support - Selection Screen
If you are looking at this screen in the program, each party has two fields. Assume the NCP must pay the CP spousal support of $1,000 per month. Under the NCP side, enter 1000.00 as the "Payment". On the CP side, enter 1000.00 as income. Iowa Support Master will do the calculations.
What do the checkboxes at the bottom of the screen have to do with anything?
The top checkbox applies the tax laws beginning January 1, 2019. As you may know, as of that date, the payor of alimony must pay income tax on all his/her income. No deduction from income is allowed for spousal support and then have taxes calculated on the balance. Furthermore, the recipient of spousal support pays not taxes on spousal support received. This is effective with all dissolutions that are entered January 1, 2019 and afer. So if your case is a disso after January 1, 2019, you will check this box.
The bottom checkbox is for those cases where spousal support is taxed and handled the way it was before January 1, 2019. You would check this box, for example, in modification actions or in the event that you simply want to treat how spousal support is taxed for the purpose of calculating child support.