How Your Agreement Date Changes Alimony Taxes
Alimony tax rules changed for agreements executed after 2018. Two terms help explain the difference. Gross income is all the income you receive that isn’t exempt from tax. A deduction is an amount that lowers your taxable income.
| Agreement executed before 2019 | Agreement executed after 2018 | |
|---|---|---|
| If you receive alimony | Include it in your gross income | Don’t include it in your gross income |
| If you pay alimony | You can generally deduct it | You can’t deduct it |
Modified Pre-2019 Agreements
An older agreement can switch to the newer rules. If a pre-2019 agreement is later modified, and the modification expressly states that the repeal of the alimony deduction applies, the post-2018 treatment applies.
If your alimony falls under the newer rules, it joins other types of income that isn’t taxable.
What Counts as Alimony for Tax Purposes
The date rules only matter if your payments count as alimony. Under the IRS alimony rules, a payment qualifies only if it meets every requirement below. A separation instrument is the legal document behind the payments, such as a divorce decree, a separate maintenance decree, or a written separation agreement.
- You and your spouse or former spouse don’t file a joint return with each other.
- The payment is in cash, including checks and money orders.
- The payment goes to or for your spouse or former spouse under a separation instrument.
- If you’re legally separated under a decree, you don’t live in the same household when the payment is made.
- The payer has no liability to keep paying after the recipient’s death.
- The payment isn’t treated as child support or a property settlement.
- The instrument doesn’t designate the payment as not includable in income and not deductible.
Payments That Aren’t Alimony
These divorce-related payments don’t qualify as alimony:
- Child support
- Noncash property settlements, whether paid in a lump sum or in installments
- Payments that are your spouse’s part of community property income
- Payments to keep up the payer’s property
- Use of the payer’s property
- Voluntary payments the separation instrument doesn’t require
How Child Support Is Treated
Child support is never deductible for the payer, and it isn’t income for the recipient. If your instrument requires both alimony and child support and the payer pays less than the total, the payments count toward child support first.
For example, say your agreement requires $1,000 a month in alimony and $500 in child support, and the payer sends $1,200. The first $500 counts as child support, and only $700 counts as alimony.
How to Report Taxable Alimony
IRS reporting rules only apply to alimony that’s still taxable under a pre-2019 agreement.
If You Receive Alimony
Report it on Form 1040 or 1040-SR with Schedule 1. If you file Form 1040-NR, report it with Schedule NEC instead. You must give the payer your Social Security number (SSN) or individual taxpayer identification number (ITIN), or you may face a $50 penalty.
If You Pay Alimony
Deduct it on Schedule 1, whether or not you itemize. Itemizing means listing individual deductions instead of taking the standard deduction. You must enter the recipient’s SSN or ITIN, or your deduction may be disallowed and you may owe a $50 penalty.
Pre-2019 agreements can also trigger alimony recapture rules. IRS Publication 504 explains recapture and other rules for divorced or separated filers.
Other Tax Changes After a Divorce
Divorce can also change your filing status, the category that sets your tax brackets and standard deduction. It’s worth comparing single vs. head of household before you file.
If this is your first return on your own, learn the basics of filing taxes for the first time.
