Certain reforms to federal tax laws, pursuant to the Tax Cuts & Jobs Act of 2017, affected alimony payments.
Alimony or post-separation support payments paid to a spouse or former spouse under a divorce or separation agreement, such as a domestic court order, a separate maintenance decree, or a written separation agreement, have been considered income for federal tax purposes since the 1940’s. Typically, alimony or post-separation support payments have been deductible by the payer spouse, while the spouse receiving support has been required to include the alimony or separation payments in their income.
Beginning Jan. 1, 2019, alimony or separate maintenance payments are no longer deductible from the income of the payer spouse, or includable in the income of the receiving spouse, if such payments were made pursuant to a court order or separation agreement executed after December 31, 2018.
This also applies to a divorce or separation agreement executed on or before December 31, 2018, and modified after that date, as long as the modification:
- changes the terms of the alimony or separate maintenance payments; and
- states that the alimony or separate maintenance payments are not deductible by the payer spouse or includable in the income of the receiving spouse.
Without such modification language, spousal support payments made pursuant to a court order or separation agreement signed prior to December 31, 2018, are still deductible by the paying spouse and includable as income by the receiving spouse.