For divorces entered on or before December 31, 2018, alimony (maintenance) has been deductible to the maintenance payor. And the spouse receiving maintenance includes it as income for tax purposes. What this means is that generally the alimony payor has received a tax break on alimony as paid.
Yes, there have always been exceptions. These exceptions have included situations where the parties agree in writing as part of their divorce decree that alimony would not be tax deductible to the payor. There have been other exceptions and the law has been complex including provisions for what is called alimony recapture, etc. This post will not discuss those complexities.
For divorces and separation agreements entered on or after January 1, 2019:
- No longer will maintenance be deductible for the spouse who pays maintenance.
- The recipient no longer includes maintenance as taxable income.
The loss of the tax break of maintenance will have a significant negative impact on divorce cases where one spouse has high income.
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