How Does the New Tax Law Affect Spousal Support?

The Tax Cuts and Jobs Act of 2017 made significant changes to many tax law provisions that went into effect in 2019, and divorcing spouses should be aware of the implications for them post-divorce. One important change involves individuals paying or receiving spousal support, which is often an aspect of a divorce judgment if the spouses have a discrepancy in earnings or earning potential.

Spousal Support Providers

In the past - for many decades - a spouse paying support had the ability to deduct the payments on their taxes. This provided an important incentive, as the paying spouse usually has significantly higher income than the other. This meant that paying alimony would also give you a tax break, so people were more likely to agree to alimony and make their required payments. For people who had their divorces finalized on or after January 1, 2019, however, this tax deduction is no longer available for providers of spousal support.

Spousal Support Recipients

The previous tax laws required the recipient of spousal support to pay taxes on that income. The new tax law eliminated this obligation, and recipients now do not need to report spousal support as taxable income. There might be an issue when it comes to retirement savings, as non-employed individuals might not be able to use spousal support to contribute to IRAs or similar retirement accounts. However, for most people, this will lessen their tax burden.

Effects on Divorce Proceedings

The new law turned alimony tax benefits upside down. This means that, in general, spouses might be more inclined to request spousal support and less inclined to agree to pay support. This can only increase conflict when it comes to an already contentious issue in divorce cases.

The result might be that fewer spouses will be able to agree on alimony determinations, and the matter might head to court for litigation more frequently. This can cause delays and additional expenses for divorcing couples. It is important to have an attorney who can explain Texas alimony laws and your rights or obligations under the law. If your case goes to court, you want an experienced divorce litigator in your corner.

If you are ordered to pay alimony, you want to keep an eye on any changes in your or your ex-spouse’s financial situation moving forward. This might result in a justified petition to modify or eliminate alimony payments, which should also be handled by an experienced divorce lawyer in Fort Worth.

Consult with a Fort Worth Divorce Lawyer for More Information

When you are getting divorced, you need the right family law attorney who is looking out for your interests in the long-term, and this includes whether you should pay or receive spousal support. At The Law Office of J. Kevin ClarkF, we work to ensure that our clients understand the implications of their divorce judgment and that their divorce order is fair and reasonable given their circumstances. Please do not hesitate to call (817) 241-3328 or contact us online for a consultation today.

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