Divorced: Paying Alimony Tax Considerations

If you pay spousal support to your ex-spouse, whether you can deduct those payments depends on a single date: the execution date of your divorce or separation agreement.

Post-2018 agreements: no deduction. If your divorce or separation agreement was executed after December 31, 2018, alimony you pay is not deductible. It comes out of your after-tax income. This was one of the most significant changes in the Tax Cuts and Jobs Act for divorcing couples.

Pre-2019 agreements: still deductible. If your agreement was executed before January 1, 2019, you deduct alimony paid as an above-the-line adjustment to income. This reduces your adjusted gross income, which can have cascading benefits -- lower AGI means more favorable phase-in thresholds for other deductions and credits.

What qualifies as deductible alimony. Even under pre-2019 rules, the payments must meet specific requirements: they must be in cash, required by a written agreement, paid to a spouse you don't live with, and they must end at the recipient's death. Payments that don't meet all criteria get reclassified as non-deductible property settlements.

The tradeoff: If you're paying under a post-2018 agreement, the deduction loss was presumably reflected in a lower payment amount during negotiation. But if the alimony was set without good tax advice, you may be paying more than the economics warranted. A CPA can help you understand the after-tax cost and plan around it.