Post-Tax Cuts And Jobs Act (TCJA) Alimony

More than three years have passed since the Tax Cuts and Jobs Act (TCJA) fundamentally changed how alimony is treated for federal tax purposes, yet confusion still reigns among many family law and tax professionals.  One of the most common questions in this author’s experience is “Does modifying an alimony agreement that was in place prior to the TCJA cause alimony to become not taxable to the recipient spouse and not deductible for the payor spouse?”   This question is frequently followed up with “Did we have to have the final decree of divorce or separation in place on or before December 31, 2018, to achieve deductibility for the payor spouse and income inclusion for the recipient spouse?

Although to the best of this author’s knowledge there has been no tax litigation to date on either of the above questions, a close look at the law as written, and subsequent IRS unofficial guidance would seem to indicate that the answer to both questions is “no”.

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