Spousal support is often an important part of divorce negotiations in community property states like Texas, but recent changes to the nation's tax laws could make negotiating alimony more challenging. Under the current federal tax code, people who pay spousal support are able to deduct these payments on their income tax returns, and the individuals who receive alimony must pay the tax on this income. However, those rules will no longer apply after Dec. 31, 2018 under the provisions of the recently passed Tax Cuts and Jobs Act.
The issue is even more complicated when couples are unable to reach a divorce settlement, and the courts are called upon to determine how much alimony should be awarded. The formulas and software used by family law judges to make these calculations are heavily dependent on tax codes, and this may lead to a period of uncertainty unless new guidelines are drawn up before the rule change.
Some experts worry that the courts could become congested with divorce cases due to the changes in tax laws dealing with alimony. They say that losing the tax benefit associated with spousal support will make divorces more difficult to settle. One expert points out that individuals who rely on alimony will likely be the hardest hit.
Experienced family law attorneys may stay abreast of the tax code as it pertains to divorce cases and follow pending legislation closely. When legislative action takes away useful negotiating tools, making it more challenging for people to achieve amicable divorce agreements, lawyers may advise their clients to pursue alternative approaches to dispute resolution before taking their cases to court and facing the costs and risks of a public trial. Collaborative law and divorce mediation encourage empathy and help couples to find common ground. These methods are sometimes successful even when the hopes of avoiding a protracted legal battle are dim.