For decades, alimony has been tax-deductible for the paying spouse and counted as taxable income for the supported spouse, but in 2019, all of that changed. Effective January 1, 2019, alimony (also known as “spousal support”) is no longer deductible for the paying spouse, nor is it counted as taxable income for the receiving spouse.
If you entered into a legal separation or divorce on or before December 31, 2018, the old laws still apply. Meaning, the alimony payments would still be tax-deductible for the paying spouse and treated as income for the receiving spouse. But for alimony ordered in divorce and separation agreements executed on or after January 1, 2019, the new laws apply.
What the IRS Has to Say
According to the Internal Revenue Service (IRS): “You can't deduct alimony or separate maintenance payments made under a divorce or separation agreement (1) executed after 2018, or (2) executed before 2019 but later modified if the modification expressly states the repeal of the deduction for alimony payments applies to the modification. Alimony and separate maintenance payments you receive under such an agreement are not included in your gross income.”
Not all payments are counted as alimony, according to the IRS. The following payments are NOT considered alimony:
- Child support payments
- Property settlements not made in cash
- Payments that are the other spouse’s portion of community property income
- Payments to keep the paying spouse’s property
- Use of the higher-earning (paying) spouse’s property
- Voluntary payments that are not required under the divorce or separation
All these years, child support has not been deductible, nor has it been counted as income. With the 2019 changes to the tax laws, now alimony or spousal support is treated the same way. Additionally, if a paying spouse is ordered to pay alimony and child support, and the spouse pays less than what is required, the payments will be applied to child support first and the remaining amount will go toward alimony, per the IRS.
Contact Schuttler, Greenberg & Mullins, LLC to request a confidential consultation with a Boca Raton divorce lawyer.