Can You Claim Alimony on Your Taxes?

The question of whether you can claim alimony on your taxes hinges on the execution date of your divorce or separation agreement. A federal law, the Tax Cuts and Jobs Act of 2017 (TCJA), altered the tax treatment of these payments. This created a dividing line, resulting in two distinct sets of rules for taxpayers. The finalization date of your legal instrument dictates all subsequent tax consequences for both the payer and the recipient.

Tax Treatment Based on Agreement Date

For Agreements Executed On or Before December 31, 2018

If your divorce or separation agreement was finalized on or before December 31, 2018, the long-standing tax rules continue to apply. Under this framework, the spouse making the alimony payments, known as the payer, is permitted to deduct the full amount paid. This is considered an “above-the-line” deduction, which means the payer does not need to itemize their deductions to claim it, potentially lowering their adjusted gross income (AGI). Conversely, the spouse receiving the payments must report that alimony as taxable income. This traditional treatment is “grandfathered in” for all pre-2019 agreements, meaning the rules remain consistent for the duration of the alimony obligation unless the agreement is formally modified.

For Agreements Executed After December 31, 2018

For any divorce or separation agreement executed on or after January 1, 2019, the TCJA reversed the tax treatment of alimony. Under these new rules, alimony payments are no longer deductible by the paying spouse. The payments are now considered a personal expense, similar to child support, and offer no federal tax benefit to the payer. Consequently, the recipient of the alimony does not include the payments in their gross income. The money received is tax-free at the federal level, which affects the financial calculations in divorce negotiations.

The IRS Definition of Alimony

For individuals with agreements dated before January 1, 2019, simply calling a payment “alimony” in a divorce decree is not sufficient for it to be deductible. The Internal Revenue Service has a specific, multi-part test, and every condition must be met for a payment to qualify as alimony for federal tax purposes.

• The payment must be made in cash, which includes checks or money orders, and be received by or on behalf of a spouse or former spouse under a divorce or separation instrument.
• The instrument cannot designate the payment as “not alimony.”
• The spouses cannot be members of the same household when the payment is made.
• The obligation to make payments must terminate upon the death of the recipient spouse, with no liability to make any payment after the recipient’s death.
• The payments cannot be classified as child support. If a payment amount is scheduled to be reduced upon an event related to a child, that portion is considered child support from the beginning.
• The spouses cannot file a joint tax return for the year the alimony is paid.

How to Report Alimony on a Tax Return

For those with divorce or separation agreements executed on or before December 31, 2018, specific reporting procedures must be followed. The spouse who paid the alimony reports the total amount as a deduction on Schedule 1 of Form 1040. A requirement for the payer is to include the recipient’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) on their tax return. The IRS cross-references the payer’s deduction with the recipient’s reported income, and if the payer fails to provide the recipient’s taxpayer identification number, the IRS may disallow the deduction and can assess a penalty. The spouse who received the alimony must report it as taxable income, also on Schedule 1 of Form 1040.

Special Rules and Considerations

Modifying Pre-2019 Agreements

If you have a divorce agreement that was finalized before 2019, the original tax rules—payer deducts, recipient pays income tax—continue to apply. However, if that agreement is legally modified, the tax treatment can change. The old rules will still apply to the modified agreement unless the modification document explicitly states that the new, post-2018 rules should apply. Parties may voluntarily agree to adopt the new rules in a modification if it is financially beneficial.

The Alimony Recapture Rule

For pre-2019 agreements, the alimony recapture rule is a provision designed to prevent property settlements from being disguised as deductible alimony. This rule can be triggered if alimony payments decrease significantly or end during the first three calendar years. If payments in the third year drop by more than $15,000 from the second year, or if payments in the second and third years are much less than the first year, the IRS may “recapture” the excess deductions. This means the paying spouse must include the excess amount back into their income in the third year, and the recipient can deduct that same amount from their income.

State Tax Law Differences

The changes made by the Tax Cuts and Jobs Act were at the federal level, and state income tax laws do not always conform. Some states have aligned with the new federal standard, but others have not. In non-conforming states, alimony may still be deductible by the payer and taxable to the recipient for state tax purposes, even for agreements from 2019 or later. Taxpayers must consult their specific state’s tax authority to understand the local rules.