Usually, couples are running to the altar, but with recent tax changes, couples in unhappy marriages may be rushing toward a quick divorce. The new tax plan is wide-ranging, but one change in how alimony will be treated has some individuals wanting to close the deal before it goes into effect. In Texas, individuals considering divorce will also have to take state law into account, and family law advisors are still putting the puzzle together.
With the deadline for the change set as Dec. 31, 2018, this year may be a wild one for individuals already in the process of ending a marriage. In summary, the new policy is the opposite of how spousal support payments have been historically treated. In the past, the alimony payment was tax deductible for the person paying, and the person receiving payments needed to claim that money as taxable income. Now, the payments are not deductible for the payer, and the person receiving the money does not have to claim it.
The results will have more money flowing toward the government, since the alimony payer is usually in a higher tax bracket than the receiver. With some cases, individuals may want to hurry to finalize a divorce this year, so that a bigger tax break will mean more money in the pocket of both payer and payee. Other people will find it beneficial to delay the resolution because of state formulas used to calculate payments.
With so much up in the air, it is hard to determine the long-term effects of the change. In family law courts across the land, the experts are analyzing exactly how this will affect cases. For individuals in Texas currently ending a marriage, many will choose to hire an attorney. An experienced family law attorney will have the knowledge to guide each individual through the needs for his or her specific case.
Source: finance.yahoo.com, “Trump’s tax bill will make 2018 a wild year for divorces”, Ethan Wolff-Mann, Jan. 10, 2018