Starting in the 2019 tax year there are changes in alimony tax law. Alimony payments are no longer tax deductible. They are also no longer reported as income by the recipient. The reason this is now like this is because the Tax Cuts and Jobs Act that was signed into law in 2017 eliminated the alimony deduction from the tax code from 2019 until 2025.
However, since this is tax law there are some exceptions still. If your divorce was finalized before 2019 the old rules still apply. If you had your divorce finalized in 2019 or after you fall under these new tax guidelines. In other words, nothing changes for you if you had your divorce decree in 2018 or earlier. If you got your divorce decree in 2019 or later these laws impact you.
If your divorce was finalized before 2019 reporting your alimony payments remain unchanged. You can still report the total amount on a Form 1040 if you have your spouse’s Social Security number. If your spouse denies giving you their Social Security number, you can notify the IRS and they will be charged a $50 for withholding the information.
For alimony you receive if your divorce was final before 2019, again the tax laws do not change for you. You must enter the full amount of all alimony you receive on a Form 1040. This also includes what is sometimes called “separate maintenance.” Separate maintenance is when your divorce is not finalized yet, but you are receiving. It does not include payments under terms of a temporary support order, that a court can issue while your divorce is pending. Child support is considered no taxable and does not need to be reported. It is not reported on your federal tax return, and when the parent is paying it the cannot list it as a tax deduction.
The IRS also has a right to recapture your deductions that you claim. This can happen if your payments significantly drop after a few years from your divorce decree being issued. IF the IRS believes that the deduction you were claiming were in the nature of child support it can add those deductions back into your taxable income in in future tax years. So if your payments end right around the time your youngest child leaves home and the IRS views the deductions you have been claiming as alimony but might actually be child support they will tax you in the amount you have been deducting in future years.
Tax laws are incredibly complex and always changing. While we here at The Law Offices of Michael Kuldiner, P.C. can help in your divorce, child support, and other family matter issues. It is always recommended to speak with a tax professional to help with issues of tax law. The information in this article is not intended as tax advice, however our attorneys may be able to help with issues similar to this.