Tax season tis a stressful time for many people. This is particularly so if you’ve been through a divorce and need to know how you should report alimony payments. The answer isn’t the same for everyone, and the main factor is when your divorce happened.
Was your divorce before or after 2019?
If your divorce happened in 2019 or any time after, alimony payments don’t factor into your taxes at all. This might be good news or bad news for you depending on which side of the equation you’re on. For divorces after 2019, the payments aren’t tax deductible, and any income from alimony is not subject to taxation.
In most cases, if your divorce happened prior to 2019, it’s possible to use alimony payments that are made to claim a tax deduction. Additionally, those who receive alimony payments have to report it as taxable income.
The Tax Cuts and Jobs Act
The TCJA (Tax Cuts and Jobs Act) is the legislation behind this change. It currently applies to divorces between 2019 and 2025, but it’s possible that Congress will decide to continue with these rules beyond that time frame.
It’s important to bear in mind that child support cannot be deducted as an alimony payment. The same applies to any payment that represents your partner’s portion of community property income.
Other payments that don’t fall into the category of alimony include:
- Non-cash property settlements
- Use of the payer’s property
- Payments for property upkeep
- Voluntary payments
Because of the Tax Cuts and Jobs Act, alimony from divorces after 2019 doesn’t make any difference in your taxes. But if you got divorced before 2019, it’s required that you report this income if you receive it, and you can deduct it if you have to pay it.
