It’s no secret that divorce affects each divorcing couple financially. The exact ways that each couple gets affected depend primarily on their financial circumstances during their marriage. Unfortunately, though, a recent tax change will soon change the way that divorced Americans get taxed, and many divorcing couples will get affected by the tax change in addition to the financial circumstances of their marriage.

The change in the tax law does not go into effect until January of 2019, but it is not too early for couples contemplating divorce or divorcing to learn about it and understand how it will affect them. For over seventy-five years, divorced couples whose divorce decrees included the payment of alimony have dealt with the payment and receipt of alimony on their tax returns in the same way. Individuals who paid alimony during a tax year got to deduct those payments from their income, and individuals who received alimony payments reported those payments as taxable income. That rule affected couples in different ways, depending upon the financial situations of each, but the overall effect is that each of the individuals in former couples with disparate incomes benefitted from the way that the law required them to report the alimony on their tax returns.

While the individuals who were paying and receiving alimony were benefitting, the government was not getting enriched by the way that alimony got treated under the tax laws. Legislators anticipate that the United States will realize just over eight billion dollars in additional tax revenue between 2019 and 2029 as the result of the change in the way alimony gets taxed. Divorce has always affected the finances of the individuals who get divorced, establishing and maintaining two separate single-income households is not easy, and when there are children, the costs are even higher. Unfortunately, the impact of divorce on each former spouse’s finances is about to increase. The new tax law will have a harmful effect on divorcing couples, especially on women, who receive a majority of the alimony that gets paid in the United States.

The tax change will affect divorced individuals in a way that runs contrary to the very purpose of alimony. Alimony can serve to even out financial resources between spouses with vastly different incomes for a time sufficient to allow the spouse who was earning less to get on their feet and chart their path to financial independence. It can take years for even the most motivated and diligent person to become financially independent, especially if they were out of the work force for a significant period of time and if they are juggling parenting responsibilities along with trying to support their new household.

What does the tax law change mean for divorcing couples? The tax law change removes what had been a powerful incentive for couples to consider making alimony a part of their divorce settlements. Fortunately, you don’t have to navigate your Texas divorce alone. An experienced and dedicated Texas family law attorney can help you work through your divorce towards a result that will work for you. Call (903) 753-7499, to arrange a consultation with Texas Family Law Attorney Alex Tyra. Alternatively, visit our web page anytime and submit an online contact form.