Alimony is money paid by one spouse to the other spouse, after separation, in order to provide the receiving spouse with support. Alimony is also sometimes referred to as spousal support, financial support, subsistence, upkeep or maintenance. Regardless of which term is used in your court order or separation agreement, the same tax implications will apply.
For all divorces entered into after January 1st, 2019, alimony is a non taxable event; the payor He or she will not receive a deduction for alimony and and thus will be taxed on their full income. Alternatively, the spouse receiving alimony does not pay any taxes on it.
There are further rules set forth by the IRS regarding alimony payments. For instance if alimony is front-loaded for the first year or two, the paying spouse may be penalized under the alimony recapture rule. Additionally, the IRS has imposed special rules regarding how to treat alimony payments if they are being attributed to pay the mortgage on the marital residence, and there are other considerations regarding alimony trusts. For an in depth look at the tax implications related to alimony payments, be sure to read our article, Alimony and Taxes: The Details.
For more information on alimony and taxes, contact us or call us at (919) 787-6668.
Lee is the founder of Rosen Law Firm and, while retired, still lives on through this website, a huge repository of information to help educate people about family law. It demystifies the divorce process, sharing the secrets and information that other lawyers normally try to keep hidden. Today, this website contains a vast assortment of webinars, legal forms, statutes, Q&As with lawyers, audio and video courses, articles, and lots more.
