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How Does the Tax Cuts and Jobs Act Impact My Alimony Payments?


Beginning New Years Day, 2019, the provisions of the Tax Cuts and Jobs Act (TCJA) go into effect. Among the reforms that the TCJA provides is a radical shift in how the age-old alimony tax deduction operates for federal income tax purposes.

The Old Alimony Tax Deductions Rules

Under the old rules, taxpayers who were obligated to pay alimony spousal support were allowed to deduct those payments from the taxable income on their federal tax returns. In contrast, those who received alimony were required to report the receipt of alimony as taxable income on their tax returns.

This configuration put the responsibility for paying taxes on alimony income to the person who benefited from the alimony spousal support payments. The taxpayer who was obligated to pay alimony was viewed as a middleman through which the payee received their income since the payor had no opportunity to benefit from the amounts used to pay for their former spouse’s spousal support.

Alimony Tax Deduction Under the Tax Cuts and Jobs Act

The TCJA drastically reforms the alimony tax deduction rule by shifting the responsibility for paying taxes of alimony payments to the taxpayer who is required to make spousal support payments. As a result, the taxpayer who pays $60,000 a year to their spouse in alimony must also pay taxes on that amount. Conversely, the taxpayer receiving alimony is not required to report it as income they received, for federal income tax purposes.

Although the effect of these reforms has been in motion since the beginning of this year, the provisions only applied to spousal support orders that were established this year. As a result, a person who is required to pay alimony under a divorce order that the court issued in 2017 may stick with the old method of paying alimony.

However, if you receive a post-judgment modification this year regarding your spousal support obligation that was issued before January 1, 2019, you can no longer take advantage of the old rules for the alimony tax deduction. Thus, if you got a divorce in 2017 that instituted your obligation to pay alimony, but your former spouse found a modest income source in 2018, you can no longer deduct alimony payments if you successfully got the court to reduce your alimony obligation in 2019.

Consult a Skilled Attorney from the Hope Law Firm for Advice

Need legal advice regarding the tax effects of the rights and obligations associated with your divorce? You should consult an experienced attorney from the Hope Law Firm for quality legal advocacy and advice. At the Hope Law Firm, we are committed to ensuring the court and the opposing shows you and your family's legal interests the proper respect and recognition they deserve.

Call us at (515) 305-2772 or contact us online for a case evaluation today.