The decision as to whether to stay or go often boils down to finances. In some Texas families, one spouse earns more and the other spouse depends upon this income. This scenario works well for some, as long as the marriage is intact. However, when the couple decides to divorce, finances can be an issue.
One way that many couples address this situation is through alimony. As a part of the property division settlement, the spouse earning more money may have to pay a set amount to the other spouse on a regular basis. Under current tax laws, the individual paying alimony can take this as a tax deduction, and the individual receiving it must list it as income.
Currently, the new tax law, expected to be signed into law immediately, will change this scenario. Under the new law, the individual paying alimony will not get a deduction from income taxes, and the person receiving it will not have to report it as income. Typically the individual receiving alimony falls into a lower tax bracket; this means that the taxes paid on this money is less.
Some fear that this new plan will make divorce negotiations more difficult in some cases. The tax implications of alimony are a primary consideration in establishing the dollar amount. While this new law is not expected to affect Texas residents currently paying or receiving alimony, it may be a consideration in new filings. Experienced legal counsel can assist the individual in analyzing the implications and negotiating an appropriate settlement.
Source: weny.com, “Alimony will now be taxed under GOP bill”, Jackie Wattles, Dec. 15, 2017
