Recent rules changes in this area have produced mixed results
For many years, obligors (people paying spousal support) could deduct these payments on their federal income tax returns. Obligees (people receiving spousal support payments) were required to report these payments as income. The 2017 Tax Cuts and Jobs Act drastically changed these roles. As of January 1, 2019, alimony payments are no longer tax-deductible and alimony payments are no longer tax reportable.
Advocates said the change would help the receiving spouses. They received tax-free alimony payments. Additionally, they could still report it in some cases, if they wanted to raise their income for loan application or other purposes. But some obligors used the change as leverage to decrease their payments (“I no longer get a tax break so I cannot afford to pay as much”). So, the jury is still out as to the final effect.
The change highlights the fact that both obligors and obligees have legal and financial rights in this area. That is especially true in Texas. The Lone Star State has a very limited alimony law. So, a Fort Worth family law attorney must carefully evaluate your case in light of the new federal rules and the existing state rules.
Alimony in Texas
In many states, spousal support is almost an automatic component of a divorce settlement. But Chapter 8 of the Texas Family Code sharply limits alimony eligibility.
Only a few obliges qualify under Section 8.051(1). Spouses are entitled to maintenance if, within two years of the divorce filing, “the spouse from whom maintenance is requested was convicted of. . .an act of family violence, as defined by Section 71.004, during the marriage [and] against the other spouse or the other spouse’s child.”
An arrest is insufficient. Only a conviction counts. Furthermore, if the victim was a minor, the victim must have been the obligee’s biological or legal child.
Not many more spouses qualify under the general provision in Section 8.051(2). A spouse is eligible for alimony if:
- S/he is unable to provide for minimum reasonable needs “because of an incapacitating physical or mental disability,” or
- The marriage lasted longer than ten years and the requesting spouse is unable to meet his/her minimum reasonable needs for any reason, or
- The requesting spouse has custody of a minor child “who requires substantial care and personal supervision because of a physical or mental disability that prevents the spouse from earning sufficient income to provide for the spouse’s minimum reasonable needs.”
Although the maintenance law repeatedly uses the phrase “minimum reasonable needs,” it does not define the phrase. Generally, it means an income above the poverty level. However, the standard of living during the marriage could raise the bar.
Amount and Duration of Payments
The law also limits the general amount and duration of payments. The amount cannot exceed $5,000 per month or 20% of the obligor’s average monthly gross income, whichever is lower. Gross income for family law purposes is often different from gross income for tax purposes.
Furthermore, the duration of payments cannot exceed 10 years. Additionally, the court “shall limit the duration of a maintenance order to the shortest reasonable period that allows the spouse seeking maintenance to earn sufficient income to provide for the spouse’s minimum reasonable needs.”
Specific factors pertaining to the amount and duration of payments include the length of the marriage, obligor’s ability to pay (as opposed to the willingness to pay), obligee’s financial needs (as opposed to the obligee’s financial wants), relative earning capacity of each spouse, noneconomic contributions to the relationship, and fault in the breakup of the marriage.
These factors often change over time, especially the ability to pay and economic need factors. Therefore, the judge has considerable power to modify or terminate payments.