Death and taxes may be inevitable, but that doesn’t make understanding these topics easier for Katy residents. Tax time is one of the most stressful and frustrating times of the year for most Americans. In addition to accounting for earned income, many people question whether they must pay taxes on other forms of money coming into their household, like alimony.
Are you getting alimony or spousal support following a divorce in Texas? If so, understanding your tax obligations is essential to protecting yourself and your financial stability.
Understanding Texas Alimony
In Texas, alimony is referred to as spousal maintenance. Maintenance supports a spouse’s lifestyle after divorce, helping them to maintain financial stability. Texas law strictly regulates who qualifies for spousal support. The requirements may make it challenging for some partners to receive money to help them stabilize their living situation after divorce.
Eligibility for Spousal Maintenance
To be eligible to receive support, a dependent spouse must meet some requirements. They must demonstrate that they do not have enough property to meet their needs. Additionally, spousal support is only an option if the partner can meet one of the following conditions:
- Spouses must have been married for at least ten years.
- The dependent spouse must prove they cannot earn enough income to be self-supporting due to physical or mental disability.
- The dependent spouse retains custody of the couple’s child, who requires specialized care and supervision due to physical or mental disability, or the income of the dependent spouse is not enough to meet the minimum needs of the disabled child.
Additionally, if the payor spouse received a family violence conviction for offenses against the dependent spouse or child during the pending divorce, they may be required to pay alimony to the other spouse.
Types of Spousal Support
Spousal support comes in two forms: court-ordered spousal maintenance and contractual alimony. Court-ordered spousal maintenance is awarded by a judge based on the specific circumstances of the marriage. After assessing the information provided, a judge can determine the appropriate amount and duration of spousal maintenance.
Contractual alimony payments occur when partners reach a spousal maintenance agreement on their terms, not by a court order. If a couple can work together to reach a mutually beneficial arrangement, they can avoid going to court. This legal solution offers more flexibility and privacy but is challenging when couples are not on the same page. However, the Family Court must still approve this agreement before it becomes effective.
Gaining alimony in Texas can be a long and tedious process. When people get the money they need to stabilize their lifestyle and meet their reasonable needs, they’re relieved. It is frightening to think that maintenance money may decrease significantly because of taxes.
Do You Have to Pay Taxes on Spousal Support in Katy, Texas?
The answer is complicated. The Tax Cuts and Jobs Act changes the U.S. tax code and how taxes are assessed for those receiving alimony. Previously, recipients of spousal support payments counted the payments as taxable income to the government, while the individual paying the spousal support could deduct those payments from their taxable income.
The TCJA overhauled the tax code so that partners paying spousal support could not deduct the payments from their taxable inco</p>
me. Also, alimony recipients did not have to report their payments as income to the Internal Revenue Service. That means they do not technically pay taxes on the spousal support money they receive.
These rules only apply to federal taxes. However, since Texas residents do not pay state income tax like other states, former spouses do not have to worry about their alimony payments as taxable income.
However, these tax rules only apply to divorce agreements executed on or after January 1, 2019, when the new tax code was enact
ed. Individuals in Katy receiving alimony from an agreement finalized before January 1, 2019, must still report spousal maintenance payments as taxable income. The TCJA changes are not retroactive, so it can be confusing for couples to understand how spousal maintenance can impact their tax burden.
How a Katy Divorce Attorney Can Help You
Divorce can be emotional, and your plate may already overflow with questions. The last thing you want to consider is whether you must pay taxes on alimony or your tax burden if you receive spousal support. At Adams Law Firm, our compassionate divorce attorneys help you navigate every aspect of separation in Texas, from helping you pursue the support you need to advising you of the tax implications of your impending divorce.
If you live in Katy and have questions about spousal maintenance and divorce, call our office today at (281) 391-9237 or contact us online.
a>. We want to protect your legal rights and help you solve your unique legal situation.
