Jamie Graham & Associates, PLLC

New law changes how alimony is taxed in divorce

Since 1942, the tax law has included a deduction for alimony payments for Texas residents and others around the country. A new tax law has recently gone into effect that changes the provisions set forth over 75 years ago. Marital law experts anticipate that the changes may prompt a flurry of people to seek a divorce in 2018.

Currently, the spouse paying alimony is able to deduce the payment amount on his or her tax return. The alimony recipient is required to pay taxes on the amount received. This will essentially be reversed for any divorce finalized after Dec. 31, 2018. The deduction will no longer be available to the spouse paying alimony, while the recipient will not have to pay taxes.

Critics of the change argue that future alimony negotiations may be more contentious, as the payer may attempt to pay a lower amount since the tax advantage has been eliminated. The United States Census Bureau reported that women represent 98 percent of the people receiving alimony. Therefore, many are concerned that these women will be negatively impacted by lower alimony amounts in the future. Eliminating the deduction for payers will likely place them in a higher tax bracket, thus generating more revenue for the government. However, the changes may prompt couples to establish specific alimony amounts in prenuptial or post-nuptial agreements.

Alimony payments are just one of many issues that couples must address in divorce negotiations. To ensure that one's financial situation is protected both now and in the future, it would be wise to seek the guidance of a Texas divorce lawyer. A respected attorney will help clients navigate the complex legal process and will work tirelessly to seek a successful outcome in the proceedings.

Source: abajournal.com, "New tax law affects alimony, could spur divorce surge", Debra Cassens Weiss, Feb. 6, 2018

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At Jamie Graham & Associates, PLLC, we have received a variety of honors and awards for our family law services. Members of our team have been listed as Top Lawyers in San Antonio Scene magazine. We take pride in the number of positive reviews we have received from satisfied clients. On AVVO, a lawyer rating website, we have received an 8.9 rating overall and many positive ratings from clients and colleagues.

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