What does the new tax law mean for alimony payers?
With passage of the Tax Cuts and Jobs Act (TCJA), taxpayers making alimony payments to an ex-spouse will no longer be allowed to deduct those expenses. Additionally, the ex-spouse on the receiving end of alimony payments is no longer required to report the payments as ordinary income. Previously, the higher-earning ex-spouse paying alimony to the lower-earning ex-spouse was able to take a tax deduction while the payee spouse had taxable ordinary income.
The new tax law eliminates deductibility of alimony payments and the income report requirements for any divorce decree issued after December 31, 2018. Decrees issued prior to January 1, 2019, will still allow taxpayers to take the deduction for alimony payments and the receiving taxpayer will will have to claim the payments as ordinary income.