divorce tax

How to Deal with Taxes During and After a Divorce?


In 2017, US Congress passed the Tax Cuts and Jobs Acts. This made significant changes to an individual’s income tax rates in various brackets, and also reduces rates for corporations. The law took full effect in Jan. 1, 2019, and it’s affecting several sectors in the state—especially families that are going through divorces.

Contractual alimonies are common among couples in Texas. Before the new tax law was passed, this meant that the higher-earning partner would have to deduct alimony payments according to their tax rate. While the lower-earning partner pays tax based on their tax based on the gross amount of the alimony received by the high-earner.

However, it’s also important to note that any alimony paid from a final order before January 2019 will still be taxable to the payee and deductible by the payor.

That said, what do ex-spouses need to know about dealing with their tax situations during and after their divorce? Take note of the pointers below.

While in the process of divorce

Before TCJA was passed, Texas couples could choose whether they can file joint or separate taxes. If they were married on or after Dec. 31, 2018, they are now required to file joint tax returns. This is important to remember because couples still need to pay this until the judge officially grants their divorce.

Of course, couples can choose to file separately so they won’t have to deal with any issues with their soon-to-be ex-spouse’s tax returns. Divorce attorneys can also help in managing how to deductible costs from the couple’s alimony (if they have one). Especially with the new law which might make the process more expensive and difficult.

This is also a great time for couples to agree on settlements on real estate and other joint properties they may have. They should also check for any existing debts as dividing properties might become more stressful if these aren’t resolved.

After the divorce is granted

It’s recommended for couples to speak with a lawyer or an expert who will help with their taxes moving forward. It doesn’t matter if the divorcees have joint or separate taxes, they need to be able to budget for their own, as well as their children if they have any.

Divorcees who still pay joint tax returns should always keep track of their deductibles, among others. No one wants to see their ex-spouse abuse the money.

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Mr. Hutton is a Divorce and Custody Lawyer based out of Round Rock, TX. His background is with child psychology at Arizona State University where he received a B.S. in 2006, and he continued this by working with the Children’s Right’s Clinic at the University of Texas School of Law where he received his J.D. in 2009. Throughout his practice, he has been a strong proponent of utilizing modern technology to improve his practice and the representation of his clients. He currently is the technology chair of CAFA of Travis County and is committed to improving and modernizing the practice of law in Texas.

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