When setting the terms of a divorce, it's important to consider how the current tax system will affect support payments and asset division. For instance, the new tax law passed by Congress in 2017 will have deep ramifications for divorcing couples in Texas one year from now. This is why plenty of couples contemplating divorce may want to get their separations finalized before 2019.
There are several reasons why getting a divorce in 2018 is more advantageous than waiting until after the law has taken effect. To start with, alimony payments will no longer be deductible for the paying spouse nor taxable for the receiving spouse. This change may not be beneficial for either party as the receiving spouse tends to fall in a smaller tax bracket than the paying spouse. Because of this, the total sum of money to be shared between both parties may be lowered, reducing everybody's share of the proverbial pie.
Another reason to be wary of the new tax law is its effects on prenuptial agreements. In fact, the clauses of such an agreement may be rendered moot thanks to the new tax law. Therefore, it could be beneficial to hasten the divorce process in order to make use of the agreements while all their clauses are still in effect.
In any case, the new tax laws are bound to complicate matters for millions of Americans, including soon-to-be divorcees. Therefore, it is always advisable to reach out to an experienced attorney who can help a client navigate this confusing terrain and make the most advantageous choices possible.