Tax rules and alimony: Changes impacting spousal support
Wenatchee World Business World
Author: Lindsey Weidenbach
For over 75 years, payers of alimony (also known as spousal support or spousal maintenance) were allowed to take a tax deduction for the amount of alimony paid to their ex-spouse. This shifted the income tax burden to the receiver of alimony, which in many instances increased the amount of income available to spouses transitioning to two households.
Under the new Tax Cuts and Job Act (TCJA), alimony will be treated differently for divorce or separation documents put into effect after Dec. 31, 2018.
What Does This Mean?
In brief, the new tax rule eliminates the payer’s ability to deduct alimony from their federal taxes. However, this all depends on when you execute, or executed, your alimony agreement or court order. For instance:
Current Payers of Alimony or Receivers of Alimony
For those who already pay or receive alimony, the TCJA changes will not affect you.
Payers — you may continue to deduct alimony from your federal income taxes
Recipients of alimony — you will continue to report alimony payments as taxable income
This tax treatment will continue to apply even if your alimony agreement or court order is subsequently changed – unless the modification specifically states that the TCJA treatment of alimony payments now applies.