It's not unusual for divorcing couples in Texas to fight over the house and possessions. However, for adults age 50 and over calling it quits, another common point of contention is retirement savings. It's even more important to pay attention to such assets because of changes mandated by the Tax Cuts and Jobs Acts that will fully take effect in 2019. The most noticeable change pertaining to end of marriage issues is with alimony. These spousal support payments will no longer be tax deductible for the paying spouse, and the receiving spouse won't be able to claim payments as income.
Anytime a couple chooses to separate, they'll be faced with an assortment of challenging issues. This includes child custody arrangements, asset division and alimony. For couples with high-asset divorces, determining how belongings will divided and how child custody will be arranged can be even more difficult. Unfortunately, making decisions regarding alimony and child support is an incredibly important task that each couple must face.
Divorced Texas parents cannot discharge child support or alimony in bankruptcy, but they may be able to discharge other elements of the divorce settlement in certain circumstances. Fewer than half of people who are supposed to get child support receive the full amount. The legal system takes failure to pay child support seriously, and it may be punished through garnishing wages, fines and even jail time.
Higher income couples in Texas who are contemplating ending their marriages may consider finalizing the divorce in 2018 to avoid changes in the federal tax code. One of the bigger ones is going to be how alimony is treated for tax purposes.
As a result of the Tax Cuts and Jobs Act, alimony for future Texas divorcees will no longer be treated as a tax deduction. The rule will apply for future separation agreements starting in 2019. This historic change reverses the legislation enacted in 1942 that permitted tax deductions for alimony and ongoing spousal financial support.
Texas residents who are considering divorce may be interested to learn that women are increasingly being held responsible for making alimony and child support payments. This may be in part due to the fact that the number of two-income households are increasing and some wives have a larger income than their husbands.
Texas couples who are divorcing or considering divorce might be concerned about the way the tax overhaul will impact alimony payments. As the effective date of the changes affecting alimony has been pushed back to the beginning of 2019, the pressure has been eased for some. However, couples that begin the divorce process or sign separation agreements in 2019 will be affected.
People considering divorce in Texas and across the country may be concerned about the impact of potential tax reform on spousal support and alimony. Alimony payments made to an ex-spouse following a divorce are currently tax-deductible by the payer and taxable income to the recipient.
When it comes to finances post-divorce, alimony and child support could have a big impact on the financial health of Texas residents. Even before reaching a support agreement, people who are divorcing need to consider how paying and receiving alimony and child support will affect them, including their taxes.
Television viewers in Texas who enjoyed David Hasselhoff's successful "Baywatch" series might assume that stars never have financial problems. Wealth and fame, however, often go hand in hand with costly divorces that impose hefty spousal support obligations, like the $21,000 a month Hasselhoff agreed to pay his ex-wife after they ended their 16-year marriage in 2006. The actor has now approached a court to end the payments entirely so that he can prepare financially for his retirement years.