Divorced: Receiving Alimony Tax Considerations

If you receive alimony from your ex-spouse, how those payments are taxed depends entirely on when your divorce or separation agreement was executed.

Post-2018 agreements: alimony is tax-free to you. If your divorce or separation agreement was executed after December 31, 2018, the alimony you receive is not included in your gross income. You don't report it on your tax return. This was a major change under the Tax Cuts and Jobs Act.

Pre-2019 agreements: alimony is taxable income. If your agreement was executed before January 1, 2019, and hasn't been modified to adopt the new rules, you must include alimony received as gross income. This applies even though your ex-spouse gets the corresponding deduction. The IRS matches these amounts between returns, so the numbers need to agree.

The modification trap. If you and your ex-spouse modify a pre-2019 agreement, the new rules apply only if the modification specifically states that the TCJA changes apply. Simply changing the payment amount doesn't automatically switch the tax treatment.

The pitfall: Receiving tax-free alimony sounds like a win, but it was factored into the payment amount during negotiation. Post-2018 payers can't deduct, so they typically agreed to pay less. The tax treatment shifted the economics, not just the reporting.