The tax cost of getting a divorce is going up for some individual taxpayers.
Under the new tax law, the Tax Cuts and Jobs Act (TCJA), deductions for alimony payments will no longer be deductible on a personal tax return. On the other hand, alimony recipients won’t have to report the payments as taxable income either. Both provisions are coming off the books.
However, unlike most of the other new tax provisions for individuals, the changes aren’t immediately effective in 2018. Notably, you could get divorced and separated this year and still qualify for deductions in the future. In any event, alimony paid out under a prior agreement remains deductible on your 2017 return.
To recap the basic tax rules in effect before the new law, taxpayers who pay alimony to a divorced or separated spouse could deduct those amounts, while recipient spouses owe tax on the income. However, not all payments qualify as deductible alimony. The terms of the divorce decree must meet certain requirements spelled out in the tax code.
Specifically, payments qualify as deductible alimony only if ALL of the following apply:
- The spouses don't file a joint return with each other;
About Ken Berry
Ken Berry, Esq., is a nationally known writer and editor specializing in tax, financial, and legal matters. During his long career, he has served as managing editor of a publisher of content-based marketing tools and vice president of an online continuing education company. As a freelance writer, Ken has authored thousands of articles for a wide variety of newsletters, magazines, and other periodicals.