Divorce Tax Implications

man holding certificate

30 Sep Divorce Tax Implications

We’ve received this question a lot this year, mainly because Divorce court decisions do not consider the effects divorce or separation has on your tax situation. Tax rules regarding divorce and separation change often, as recently as the Tax Cuts and Jobs Act. So, lets look at what has changed:

Timing of Agreements

Agreements executed beginning January 1, 2019 or later. Alimony or separate maintenance payments are not deductible from the payor’s income, nor are they includable in the income of the receiving spouse if made under a divorce or separation agreement executed after December 31, 2018.

If agreements executed on or before December 31, 2018 and then modified to change some terms, the new law applies.

Agreements executed on or before December 31, 2018 

Before tax reform, a taxpayer who made payments to a former spouse could deduct it on their tax return. The taxpayer who receives the payments is required to include it in their income. Agreements modified after that date still follow previous laws as long as the modifications do not:

  • Change the terms of the alimony or separate maintenance payments.
  • Specifically state that alimony or separate maintenance payments are not deductible by the payer spouse or includable in the income of the receiving spouse.

You can read this also on IRS.gov. Give us a call if you have any questions about the tax rules surrounding divorce and separation.



We work closely with you to handpick a solution for your unique tax situation.
Call Now ButtonNeed Tax Help Now? Call Us!