Do I Need to Report Alimony Received From a Former Spouse?

Alimony payments can have tax implications, depending on when the divorce agreement was finalized. Tax laws changed in 2019, altering how alimony is treated for both the payer and recipient. Understanding these rules ensures compliance with IRS requirements and helps avoid penalties.

Meeting the Criteria for Alimony

For a payment to qualify as alimony for tax purposes, it must be made under a legally binding divorce or separation agreement, such as a divorce decree or written separation agreement. Informal payments, even if intended to support a former spouse, do not count.

Payments must be in cash or cash equivalents, such as checks or bank transfers. Non-cash payments, like property transfers or covering a former spouse’s expenses directly, do not qualify. Payments must also go to or on behalf of the former spouse, not a third party, unless explicitly stated in the agreement.

Spouses cannot file a joint tax return while making or receiving alimony. The obligation must also end upon the recipient’s death. If payments continue to the recipient’s estate or another party, they are not considered alimony under IRS rules.

Items That Do Not Qualify

Certain financial exchanges between former spouses may resemble alimony but do not meet IRS criteria. Voluntary payments outside a formal agreement are considered personal gifts, which are neither deductible for the payer nor taxable for the recipient.

Lump-sum property settlements also do not qualify. If a divorce agreement includes a one-time or installment-based division of assets—such as transferring ownership of a home or investment account—these payments are treated as property distribution, not alimony, and are not reported as income.

Child support is another distinct category. Payments designated as child support in a divorce decree are strictly for the child’s benefit and are not taxable. If a divorce agreement does not clearly separate child support from alimony, and payments decrease when a child reaches a specific age or milestone, the IRS may reclassify part of the alimony as child support, making it non-taxable.

Reporting the Amount

How alimony is reported depends on when the divorce or separation agreement was finalized. The Tax Cuts and Jobs Act (TCJA) changed alimony tax treatment, so the date of the agreement determines whether it is taxable income.

If the agreement was executed on or before December 31, 2018, and has not been modified to adopt post-2018 tax rules, alimony payments must be reported as income by the recipient and are deductible for the payer. Recipients report alimony on Schedule 1 (Form 1040), Line 2a.

For agreements finalized or modified after 2018, alimony is no longer taxable income. The recipient does not report it, and the payer cannot deduct it. If an older agreement is modified after 2018 to adopt the TCJA rules, the new tax treatment applies moving forward.

Documentation Needs

Both the payer and recipient should maintain thorough records of alimony payments to comply with IRS regulations and prevent disputes. The divorce or separation agreement should clearly outline payment terms, including amounts, frequency, and conditions for modification or termination. This document is essential for tax purposes and should be retained indefinitely.

Bank statements, canceled checks, or electronic payment confirmations provide proof of payments. These records should include transaction dates, amounts, and recipient details. If payments are made through third-party services, obtaining annual transaction summaries can simplify record-keeping.

If disputes arise over missed or incorrect payments, maintaining a personal ledger can help track transactions. This ledger should note any deviations from the agreement, such as late payments or adjustments. Keeping copies of emails or letters discussing modifications can also clarify misunderstandings and serve as evidence if legal action is necessary.