Reporting Alimony Income on Schedule 1 Line 13

Taxpayers use Form 1040 to file their annual income taxes, but certain financial situations require supplementary forms. Schedule 1, “Additional Income and Adjustments to Income,” serves to report specific income types and deductions that do not have a dedicated line on the main form. The schedule is divided into two parts, with Part I covering various sources of additional income. Understanding the correct procedure for these payments is a function of specific federal tax law changes and the date of the legal agreement governing the payments.

Defining Taxable Alimony

The taxability of alimony payments is determined entirely by the execution date of the divorce or separation agreement. The Tax Cuts and Jobs Act of 2017 (TCJA) altered the tax treatment of these payments.

For divorce or separation agreements executed on or before December 31, 2018, alimony payments are considered taxable income to the recipient. To qualify as alimony under these older rules, payments must meet several specific IRS tests.

• The payment must be in cash, including checks or money orders, and be required by a divorce or separation instrument.
• The agreement cannot designate the payment as something other than alimony, such as child support or a property settlement.
• The spouses cannot be members of the same household when the payment is made.
• There must be no obligation to continue payments after the recipient’s death.

Under the TCJA, payments made under agreements executed after December 31, 2018, are not considered taxable income for the person receiving them. This change is permanent. It is also possible for an agreement originally executed before 2019 to be modified. If such a modification explicitly states that the new tax rules under the TCJA apply, then those alimony payments also become non-taxable to the recipient.

Payments Not Considered Alimony

The IRS has specific definitions for payments that are not considered alimony and should not be reported as income on Schedule 1.

• Child support is a common payment that is never considered alimony. These payments are not deductible by the payer and are not taxable to the recipient.
• Noncash property settlements, which include the division of marital property through a lump-sum or installments, are not alimony. This applies to assets like a house, car, or investments.
• Voluntary payments not legally required by the divorce or separation instrument do not qualify as alimony for tax purposes.
• Payments made to maintain the payer’s own property, even if the former spouse is living in it, are not alimony, nor is the value of a former spouse’s use of the payer’s property.

How to Report Alimony on Schedule 1

For individuals with divorce or separation agreements dated before January 1, 2019, who have received qualifying alimony payments, reporting this income is required. The first step is to obtain Schedule 1, “Additional Income and Adjustments to Income,” which is filed with Form 1040. This income is reported in Part I of the schedule.

On Schedule 1, you will find a line designated for alimony received, which is Line 2a. On this line, you must enter the total amount of all taxable alimony payments you received throughout the tax year. The IRS also requires you to enter the date of the original divorce or separation agreement on this same line.

You are also required to provide your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) to the person paying the alimony. Failure to provide this information to the payer can result in a $50 penalty. Once all additional income is listed, the total from Part I of Schedule 1 is carried over to your main Form 1040.