Question: Ben and Mary are divorced. Their divorce agreement was executed in August 2018. Under the terms of their divorce agreement, Ben continued to make alimony payments through 2020. Can Ben deduct the 2020 alimony payments?
Answer: Yes. Ben can deduct the 2020 alimony payments. They are taxable income to Mary because the divorce agreement was executed before Jan. 1, 2019. The alimony payments are made under the divorce agreement and are not voluntary payments.
For divorce or separation agreements executed after Dec. 31, 2018, alimony is not deductible by the payor spouse nor included in the income of the recipient spouse. Additionally, alimony payments are not deductible nor included in income if the couple executed a divorce decree or similar agreement prior to 2019 and modified it after Dec. 31, 2018, to expressly provide that alimony received is not taxable income to the recipient spouse.
Alimony payments under a divorce decree or similar instrument executed before Jan. 1, 2019, are treated by the Internal Revenue Code as a shift of income from the payer to the payee. The payor can deduct the alimony while the payee must recognize the payments as income.
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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.