For years, people whose divorce agreements required that they pay alimony to their ex-spouse were able to deduct those payments from their annual income, thus reducing their tax liability. At the same time, the recipients of those payments were required to report them as taxable income. But the passage of the Tax Cuts and Jobs Act (TCJA) put an end to that practice for anybody whose divorces were put into place after December 31, 2018. For those divorced after that date and through the end of 2025 (when the TCJA expires), the alimony deduction is eliminated, though the ability to take the deduction for previously existing agreements and the requirement to report payments received as income is grandfathered unless an existing decree or agreement is modified and the repeal of the deduction is explicitly stated within the change.

Those divorced prior to the end of 2018 and whose agreement has not been modified should report the amount of alimony that they have received on their Form 1040 on Line 2A of Schedule 1. If you paid alimony per the terms of a pre-TCJA agreement, record the total amount on line 18a of Schedule 1 and then reflect the amount as an adjustment to income on 10a of the form. You will be asked for additional information for cross-reference and confirmation, including the date of your divorce decree and your ex-spouse’s Social Security number. If your ex won’t provide you with their Social Security number you can report the problem to the IRS, which will charge your ex a penalty for non-cooperation.

The tax changes only apply to alimony, or what is sometimes referred to as “separate maintenance.” It does not apply to child support, payments that are a part of community property income, noncash property settlements or voluntary payments that are not part of the divorce decree or agreement.

The tax changes made in the TCJA have created significant confusion and added another layer of complexity to those who were divorcing immediately before they took place. Many divorcing couples found that it made their negotiations more challenging, as those required to pay alimony were less inclined to generosity once they lost their deduction.  It is unknown whether Congress will extend the changes when they expire at the end of 2025.

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