Family Law & Employment Law Attorney
alimony

Can I Deduct My Alimony Payments From My Federal Income Taxes?

When couples get divorced, the court can award spousal support, more commonly known as alimony, to one of the parties. Alimony is money that one spouse is ordered to pay to the other spouse or to third-parties on behalf of the ex-spouse. Alimony can be awarded to the husband or to the wife. Folks contemplating divorce who believe they may be ordered to pay alimony often wonder whether alimony they are ordered to pay can be deducted for federal income tax purposes. Currently, the answer is no.

Prior to January 1, 2019, alimony was considered tax deductible from the payor spouse's income pursuant to § 215 of the Internal Revenue Code. The spouse who received the alimony was required to report alimony payments as income and pay the taxes owed on it.

However, the United States Congress passed the Tax Cuts and Jobs Act ("TCJA")in 2017. The TCJA repealed § 215 of the Internal Revenue Code for divorce decrees entered after December 31, 2018. As a result, alimony awarded pursuant to divorce decrees entered after such date is not tax deductible. Additionally, the spouse receiving the alimony is no longer required to report the payments as income. This change in the tax code was significant, as it makes alimony more expensive for the payor spouse and results in a windfall for the receiving spouse who is no longer required to pay taxes on alimony payments.

The TCJA did not change anything for alimony payments awarded pursuant to divorce decrees entered on or before December 31, 2018. Such payments remain tax deductible by the payor spouse and reportable income for the receiving spouse. However, if a pre-2019 decree is modified after December 31, 2018, the TCJA's repeal of § 215 can be made applicable if the modified decree explicitly states that the TCJA's tax treatment of alimony payments applies to future alimony payments. If the modified decree contains such a statement, future alimony payments will be treated as non-deductible and the receiving spouse will not be required to report the payments as income. If the modified decree is silent as to the tax treatment of future alimony payments, then such payments remain tax deductible for the payor spouse and reportable income of the receiving spouse. A payor spouse would be wise to consider this before seeking a modification of alimony awarded prior to 2019.

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