The rules for reporting alimony income on your tax return changed with the 2019 tax year. Alimony payments are no longer tax-deductible, and the receipt of alimony isn't taxable as income for divorces entered into after December 31, 2018.
The Tax Cuts and Jobs Act (TCJA) eliminated the alimony deduction from the tax code from 2019 through 2025 for most divorce agreements and decrees entered into during that time. Taxpayers can still claim the deduction and must still report the payments for most divorces entered into before December 31, 2018.
The TCJA is set to "sunset" or expire at the end of 2025, but it's possible that Congress will breathe new life into some or all of its provisions for another stretch of years.
Alimony Tax Rules for Divorces Before 2019
The old tax rules still apply if your divorce agreement was executed or your divorce decree was issued in 2018 or earlier. Alimony is still considered taxable income for the recipient, and it's still tax deductible for the payer under the same rules.
Payers must still meet certain requirements for these payments to qualify as deductible alimony.
The new rules also apply if a decree or agreement is modified after December 31, 2018 and the modification states that the repeal of the alimony deduction applies to the modification.
Reporting Alimony You've Received as Income
Enter the full amount of any alimony you received on line 2a of the 2020 Schedule 1 with your 2020 Form 1040 to report alimony you received as income if you were divorced within the time frame when you must do so. Alimony includes what is sometimes called "separate maintenance"—income received if you were legally separated but not technically divorced yet. It does not include:
- Child support
- Noncash property settlements
- Payments that represent community property income
- Use of the payer's property
- Voluntary payments that aren't required by the divorce decree or agreement
The total of Part I, "Additional Income," of Schedule 1 transfers to line 8 of the 2020 Form 1040 tax return.
Child support is considered a non-taxable event. It’s not reported on your federal tax return, and the parent paying it can't claim it as a tax deduction.
Claiming Alimony You've Paid as a Deduction
Report the total amount you paid on line 18a of the 2020 Schedule 1, then transfer the total from this section, "Adjustments to Income," to line 10a of the 2020 Form 1040. Schedule one also asks you to enter your ex-spouse's Social Security number, as well as the date of your divorce decree or agreement to confirm that you're still entitled to claim the deduction.
Entering your ex's Social Security number lets the IRS know who received the money so the agency can make sure the individual declared it as income.
Don't worry if you don't have your former spouse's Social Security number and they won't give it to you. You can notify the IRS of the problem, and your ex can be charged a $50 penalty for not supplying it to you.
Requirements for Deducting Alimony Payments
You're able to deduct alimony from your taxable income if your divorce was finalized before 2019 as long as you meet certain requirements and rules.
- You must pay alimony in cash, which includes checks or money orders. If you give property or an asset in lieu of alimony, it’s not deductible. The IRS says this is a property settlement.
- Your divorce decree, separate maintenance decree, or written divorce agreement can't state that the payment is anything other than alimony. In fact, the document should clearly state that it is alimony or separate maintenance, not child support or an aspect of property settlement, because these don't count as alimony.
- You and your former spouse can't live in the same household when you make the payments.
- You have no liability to continue making payments after the death of your former spouse. Ideally, your divorce decree or separate maintenance agreement should clearly state this as well.
Anyone who claims alimony income or deducts alimony payments has to provide the date of their original divorce or separation agreement as of tax year 2019.
Amending Your 2018 Tax Return
You might still have time to go back and amend your 2018 tax return if you've realized you got one or more of these rules wrong. You might have as many as three years to file an amended return beginning with the date you filed your original return. You would have until April 2022 if you filed your 2018 tax year return on its due date in April 2019.
But you have only two years from the date you paid any taxes on your original 2018 return if you did so on a different date from when you filed. Your deadline is whichever date is later.
The Alimony Recapture Rule
The Internal Revenue Service reserves the right to “recapture” your deductions if it determines that the payments you made don't qualify as alimony. This means that the amount of alimony you deducted must be added back to your income in future tax years, at which time it becomes taxable.
This might happen if the amount of your payments drops significantly within one to two years of your divorce, or if your alimony payments end entirely within three years of your divorce. It might also happen if payments end as soon as your youngest child leaves the nest. The IRS will review your situation to determine if the payments were indeed alimony or separate maintenance.
Your payments can't decrease by $15,000 or more in the third year compared to what they were in the second year, and the last two years’ payments can’t “decrease significantly” compared to the payment in the first year.
No dollar amount is attached to the “decrease significantly” rule—it’s open to IRS interpretation. The idea is to prevent spouses from camouflaging property settlements as alimony to claim the deduction. Property settlements are often completed within the first three years after divorce.
The IRS makes exceptions for circumstances beyond your control, such as if alimony is modified downward by the court due to an unforeseen financial crisis.
These time frames apply more stringently to divorce agreements entered into between spouses as opposed to court orders.
NOTE: The information contained in this article is not tax advice and it's not a substitute for such advice. State and federal laws change frequently. Please consult with an accountant or an attorney for current tax or legal advice.