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New tax laws may affect couples who divorce

Texas couples may choose to end their marriage for a variety of reasons. Much like each marriage, every divorce is unique. Some divorcing couples may find the process to be straightforward, while others may find it a bit more complicated. Recently, new laws have changed the way alimony will be taxed. 

Alimony is a payment made by the spouse with a greater income to the spouse whose income is less. Under current tax laws, the party paying alimony may deduct the amount, while it is considered taxable income for the payee. Beginning in 2019, this policy will reverse. 

Under the new tax laws, parties receiving alimony will no longer need to report it as income on their federal tax return. Those paying it will no longer be able to claim a deduction. This change may be confusing for those who have recently decided to end their marriage. 

Not all Texas couples who have chosen to divorce will be affected by the new laws. Divorces that are final by the end of 2018 will be held to the old rules. The same can be said for divorces that are already final. Divorces which are filed in 2018, but not final until 2019, however, will be subject to the new tax laws. 

No matter the reason a couple decides to divorce, the legal process aims to reach a just resolution for both parties. Some may find it difficult to reach an agreement regarding division of community property, alimony or other common components of a divorce. An experienced attorney can assist in navigating the legal process, and aid his or her client in reaching a comprehensive and binding settlement.

Source: texasstandard.org, "Will 2018 Be The Year Of The Tax Divorce?", Laura Rice, March 26, 2018

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