Alimony and Divorce
For tax purposes, payments from one spouse to the other will be classified as alimony if they fit within the tax code's definition of alimony and separate maintenance payments under I.R.C. § 71 (hereinafter referred to as “alimony”). Such payments are classified as alimony regardless of the intent of the payor and payee spouses, unless the divorce or separation agreement specifies that the payment is not intended to be deductible alimony. Unlike most other classes of transactions-where the IRS often ignores the taxpayer's characterization of a transaction in favor of the substance of the transaction-divorcing spouses have the ability to specify that a transaction otherwise satisfying the definition of alimony will not be treated as alimony for tax purposes. For any divorce or separation instrument executed before 2019, alimony payments are deductible by the payor spouse and included into income by the payee spouse; for any divorce or separation instrument executed after 2018, alimony payments are neither deductible by the payor nor includible in the income of the payee. The change is effective for any divorce or separation instrument executed after December 31, 2018, or for any divorce or separation instrument executed on or before December 31, 2018, and modified after that date, if the modification expressly provides that the amendments made by this amendment apply to the modification. There has been no change in the treatment of child support payments, which are not deductible or includible in income by the recipient. Further, property settlements are not alimony payments and are not deductible or includible in income. Rather, they are a division of property belonging to the parties.
Mertens Law of Federal Income Taxation
St. Paul, MN
William Byrnes, Christopher Sove & Jason A. Fiske,
Alimony and Divorce,
Mertens L. Fed. Income Tax'n
Available at: https://scholarship.law.tamu.edu/facscholar/1113