Alimony Payments and Recipients

The overhaul made a significant change to the tax status. For divorce and separation agreements signed after 2018, payers will not be able to deduct on their tax returns. At the same time, future recipients will no longer be required to report these payments as income, making their tax treatment similar to that for child support. Deductions for paid as a result of agreements signed in 2018 and earlier will still be permitted, and such payments will still be taxable to recipients. Changes to the of the overhaul will be negative in many cases for both couple members because the payer and the payee are often in very different tax brackets.  The resulting payments are likely to shrink to lower-earning spouses. Alimony, also known as maintenance, is usually used when one divorcing couple’s spouse earns much more than the other. Alimony payments continue for years and help to cover the costs of splitting one household into two.