In case of recurring payments of alimony: Alimony, in this case, is considered as a revenue receipt. Therefore, it is treated as income that is taxable in the hands of the recipient. Nevertheless, it needs to be noted that the person who makes the payment of alimony may not claim any sort of deduction against the same.
Will alimony ever be tax deductible again?
As previously stated, alimony is no longer tax-deductible nor can it be included as income on tax returns if your divorce agreement was finalized as of 2019. For any divorce agreements that include alimony and were finalized prior to 2019, you may still continue to deduct payments or report alimony as income.
How does the new tax law affect alimony?
One provision in the new tax law removed the 75-year-old tax deduction for alimony payments. As the law currently stands, paying spouses are able to deduct the amount of alimony payments from their annual federal taxes.
Do you have to include alimony in your income?
Receiving spouses must include the alimony or separation payments in their income. Beginning Jan. 1, 2019, alimony or separate maintenance payments are not deductible from the income of the payer spouse, or includable in the income of the receiving spouse, if made under a divorce or separation agreement executed after Dec. 31, 2018.
Is there a way to increase the duration of alimony?
Indeed, such adjustments are available and frequently done now. For example, to help offset a payer’s reduced ability to pay monthly alimony, the duration of the alimony obligation may increase. Another possible adjustment is to award a larger percentage of the property in lieu of reduced alimony payments.
When is alimony not deductible in a divorce?
This also applies to a divorce or separation agreement executed on or before Dec. 31, 2018, and modified after December 31, 2018, as long as the modification: states that the alimony or separate maintenance payments are not deductible by the payer spouse or includable in the income of the receiving spouse.
