With the tax filing deadline fast approaching, divorced couples who can no longer file jointly may wonder how to handle the spousal support they pay and receive. Common questions: can the payor deduct spousal support on a federal tax return? Should the recipient include maintenance as taxable income?
Until 2019, the short answer to both questions was “Yes.” The person who paid maintenance claimed the deduction and provided the Tax Identification Number (TIN) of the ex-spouse receiving the payments. The payee would add the same amount to their gross income.
Then, as part of sweeping tax law changes passed by Congress at the end of 2018, the answer became, “It depends.”
According to the Internal Revenue Service regarding Alimony and Separate Maintenance, this is what divorced couples need to know:
Maintenance IS taxable income for recipients and deductible for payors IF:
- A divorce decree containing a maintenance agreement was finalized prior to 2019;
- Maintenance has not been modified since December 31, 2018.
Maintenance IS NOT taxable income or tax deductible IF:
- The divorce decree and alimony agreement was finalized in court on or after January 1, 2019; OR
- Pre-2019 spousal support was modified and meets these conditions:
- The modification was filed after 2018; AND
- The modification “expressly states the repeal of the deduction for alimony payments applies to the modification”, according to the IRS.
Other types of post-divorce payments, including child support and property settlements, are neither taxable income nor tax deductible in most situations.
All of us here at Raza & Jones, LLC understand this is a challenging time for our clients. As a family law firm, under St. Louis County’s Order pertaining to COVID-19 we are considered an essential business, and we remain open and available to all our clients. Our entire firm is working remotely, using our videoconference account to meet with clients or speaking by telephone. We are committed to delivering the same high standard of compassionate, effective representation we are known for, in the face of rapidly changing circumstances.
With a combined 30 years in family law, the attorneys at Raza & Jones, LLC, will provide the legal guidance you need. For questions, or to schedule a confidential consultation, call 314-449-8830.