Ending a marriage is never an easy process, but there are recent changes to tax laws that could make it even more difficult in the New Year. On January 1 of 2019, laws that have been in place for 75 years will change, affecting how taxes work for those who pay or receive alimony. As a result, many people have been trying to finalize their divorces before the end of the year. Those in Texas who will file for divorce in 2019 will find it beneficial to learn about how the process will affect them and what to expect.
The intent of alimony is to offset the economic hardship that divorce brings for the lesser-earning spouse. This means that a spouse who worked part time or stayed home with the children will have financial support from his or her former spouse. However, tax laws also offered incentive to the spouse who was making these payments, allowing him or her to deduct that amount for tax purposes.
In the past, the potential tax breaks for the paying spouse made it easier for two spouses to negotiate on the issue of alimony. However, by taking away the ability to deduct the amount that a person will pay, it may take away the incentive to work together on a spousal support agreement. Divorces could become more difficult and contentious.
If a Texas reader is planning to move forward with divorce in the New Year, he or she will find great benefit in learning more about how tax changes could impact his or her final settlement. Preparing for what is ahead may reduce the chance of conflict and contention when addressing difficult financial issues. Divorce may be more difficult after the first of the year, but it is still possible to reach an agreement that is workable for both parties.