Can You Claim Spousal Support on Taxes?

Spousal support, often referred to as alimony or spousal maintenance, involves payments made by one former spouse to another following a divorce or legal separation. Understanding how these payments affect tax obligations is important for both the payer and the recipient. The tax treatment of spousal support depends on when the divorce or separation agreement was finalized, dictating whether payments are deductible for one party and taxable income for the other.

Tax Treatment Based on Agreement Date

The tax implications of spousal support payments are primarily determined by the date the divorce or separation agreement was executed. A significant change in federal tax law, introduced by the Tax Cuts and Jobs Act (TCJA), altered how these payments are treated for agreements finalized on or after January 1, 2019. This date serves as a dividing line for federal tax purposes.

For divorce or separation agreements executed on or before December 31, 2018, the traditional tax rules generally apply. Under these rules, the individual making spousal support payments can deduct the amount paid from their gross income. Conversely, the individual receiving these payments must include the spousal support as taxable income on their federal tax return.

For agreements executed after December 31, 2018, the tax treatment of spousal support shifted considerably. Under the updated law, spousal support payments are no longer deductible by the payer. Correspondingly, the recipient of these payments does not include them as taxable income. This means that for newer agreements, spousal support has no federal income tax consequences for either party.

There is an exception for agreements finalized before January 1, 2019, that are later modified. If such an agreement is modified after December 31, 2018, the original tax rules will continue to apply unless the modification explicitly states that the new TCJA rules should govern the payments. This allows parties to an older agreement to choose to adopt the newer tax treatment if they mutually agree and clearly document this intent.

Qualifying Payments for Tax Purposes

For spousal support payments to have had tax consequences under the pre-2019 rules, they had to meet specific Internal Revenue Service (IRS) criteria to be considered “alimony or separate maintenance payments.” Understanding these criteria remains relevant to distinguish spousal support from other financial arrangements in a divorce. The payments must be made under a divorce or separation instrument, which includes a divorce decree, a separate maintenance decree, or a written separation agreement.

Payments must be made in cash, which includes checks or money orders. Transfers of property or services do not qualify as spousal support for tax purposes. The divorce or separation instrument must also not designate the payment as something other than spousal support, meaning it cannot explicitly state that the payment is not intended to be includible in the recipient’s income or deductible by the payer.

The payer and recipient must not be members of the same household when the payments are made, particularly if they are legally separated under a decree. There should also be no liability to make payments after the death of the recipient spouse; the obligation to pay must cease upon the recipient’s passing.

Payments must not be treated as child support or a property settlement. Child support payments are never deductible by the payer and are never considered taxable income to the recipient. Property settlements, which involve the division of assets, are generally not deductible or taxable. If a payment covers both spousal support and child support and the full amount is not paid, the payment is first applied to child support.

Reporting Spousal Support on Tax Returns

The method for reporting spousal support on federal tax returns varies based on whether the divorce or separation agreement was executed before or after January 1, 2019. For agreements finalized on or before December 31, 2018, where spousal support payments are deductible by the payer and taxable to the recipient, specific reporting steps are required.

If you are the individual paying spousal support under a pre-2019 agreement, you may deduct the amount paid on Schedule 1 (Form 1040), line 19a. It is mandatory to provide the Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) of the recipient on line 19b of Schedule 1. Failure to provide this identification number can result in the disallowance of the deduction and a potential penalty. You must also enter the date of the original divorce or separation agreement on line 19c.

If you are the individual receiving spousal support under a pre-2019 agreement, you must report the amount received as income on Schedule 1 (Form 1040), line 2a. You are also required to provide the date of the original divorce or separation agreement on line 2b. You must provide your SSN or ITIN to the payer to avoid potential penalties. This ensures the IRS can match the reported deduction by the payer with the reported income by the recipient.

For divorce or separation agreements executed after December 31, 2018, spousal support payments are neither deductible by the payer nor taxable to the recipient. Therefore, neither party needs to report them on their federal income tax returns. This streamlined approach eliminates the need for specific lines on tax forms for these particular payments.