Question: Frank and Mercy divorced on Jan. 11, 2018, but continued to live together through 2021. Frank paid alimony to his ex-spouse in 2021. Does Mercy pay taxes on the alimony, and can Frank deduct the alimony payments?
Answer: No. Mercy will not pay taxes on the alimony payments and Frank will not be able to deduct the payments. Generally, alimony payments under pre-2019 divorce decree are deductible by the payer and includable as income by the recipient. However, there are requirements that must be met for these to occur. One of the requirements is that the payee and the payer cannot be members of the same household at the time the payments were made. Because the two were still living together at the time, these payments will not count as taxable income to Mercy and will not be deductible for Frank.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.