Alimony Payments as Tax Deductions

For many years, alimony payments made to a former spouse under Section 71 of the Internal Revenue Code were deductible by the payor and taxed as income by the recipient so long as certain qualifications were met.

As a result of the Tax Cuts and Jobs Act of 2017, for all agreements entered into for the payment of alimony beginning January 1, 2019, alimony is no longer deductible for the payor and the recipient is no longer required to include these payments as income. 

If an agreement which contained an alimony provision was entered into by no later than December 31, 2018, the payment of alimony would continue to be covered by the prior law and would be deductible to the payor and income to the recipient. 

Although the deduction for alimony has been eliminated, there are still strategies available for both parties in divorce negotiations that can be advantageous.