January has been affectionately dubbed “divorce month” by experts, and the reasons why might be obvious enough. People in Texas often spend the beginning of a new year reflecting on their lives. Fresh out of the holiday season when tensions between unhappy couples might already be strained, this period of introspection helps some people realize that they are no longer happy and that a divorce is the best option for their future.
Just because soon-to-be divorced couples might be following the trend of filing in January, they might want to be cautious in expecting the same outcomes as other couples. Some aspects of the Dec. 2017 tax law did not go into effect until the beginning of Jan. 2019. This could be throwing many people into uncharted territory.
Perhaps the most widely discussed change is the one in regard to alimony, which is commonly referred to as spousal support. In the past, those paying support could deduct the amount on their taxes while the recipient could list it as taxable income, creating a net benefit for the divorced couple. This arrangement also made it easier for the paying party to afford higher monthly amounts. The new tax law takes away the ability to deduct alimony payments and those who receive it will not have the count it as income.
State and local income taxes — SALT — were also affected by a new cap. The new $10,000 deduction will possibly create a higher tax burden than divorcing couples in the past had to deal with. These changes could affect some people’s ability to remain in the marital home, particularly those who largely rely on modest spousal support payments as income.
Divorce can be complicated enough as is, but the introduction of new tax laws can make it particularly difficult for some people in Texas. Thinking of fresh unknowns in regard to things like alimony and the division of the marital home could even keep some people from pursuing a much-needed divorce. While it might seem overwhelming at first, most people find that with careful attention to detail, they can come out on the other side of divorce in the best position possible.