How to determine if you have to report alimony on your tax return.

Is Alimony Income or a Deduction on a Tax Return?

 

Tax filing season has started, and many divorced individuals are confused on reporting alimony payments as taxable income or a deduction.

 

The simple answer: it depends on whether the divorce was on or before December 31, 2018.

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Effective January 1, 2019, the new tax law changed the way alimony is reported and taxed.  Specifically, alimony is no longer deductible by the paying spouse and no longer taxable as income for the recipient spouse.

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The text of Section 11051 is included at the end of this article. But, for those who need the bottom line, we’ve created an alimony and child support cheat sheet.

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ALIMONY AND CHILD SUPPORT ANSWER GUIDE

 

Question: Are alimony payments or child support payments considered taxable income?

Do I include payments to determine if I am required to file a tax return?

Can I deduct my child support and alimony payments?

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Child support payments

• Not deductible by payer.

• Not taxable to recipient.

• Don’t include child support payments received when you calculate your gross income to see if you're required to file a tax return.

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Alimony payments (maintenance, spousal support)

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If divorced on or before December 31, 2018

• Deductible by payer.

• Taxable to the recipient.

• Include alimony payments when you calculate your gross income to see if you’re required to file a tax return.

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If divorced after December 31, 2018

• Not deductible by payer.

• Not taxable to the recipient.

• Don’t include alimony payments received when you calculate your gross income to see if you’re required to file a tax return.

 

If divorced prior to December 31, 2018 BUT divorce agreement was/is modified after December 31, 2018, unless the parties specify to keep the old tax status:

• Not taxable to recipient.

• Not deductible to payer.  

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TIP: The new tax law is in effect only until 2025, and it could change before then as well. Put language into your divorce agreements to avoid the parties having to return to court to modify a carefully constructed agreement based on a change in tax law.

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RESOURCES

You can find the relevant section of the Tax Cuts and Jobs Act of 2017 here. 

IRS Publications: Tax Topic 452, Alimony; Publication 504, Divorced or Separated Individuals

 

 

This information has been provided by WIN's Certified Divorce Financial Analyst and does not constitute legal or tax advice, and is not intended to create an attorney-client relationship. Please consult with your divorce attorney and tax professional regarding the appropriateness to your unique circumstances. WIN's CDFA is available to consult with you, your attorney and tax professional upon request.