{"id":43773,"date":"2019-02-01T16:26:18","date_gmt":"2019-02-01T22:26:18","guid":{"rendered":"https:\/\/resource-center.hrblock.com\/?p=43773"},"modified":"2021-07-19T15:59:30","modified_gmt":"2021-07-19T20:59:30","slug":"alimony-and-tax-reform","status":"publish","type":"post","link":"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/irs\/tax-reform\/alimony-and-tax-reform\/","title":{"rendered":"What You Should Know About Alimony and Tax Reform"},"content":{"rendered":"

After tax reform, an ex-spouse who pays alimony can no longer deduct alimony payments, and the ex-spouse receiving the payments no longer must include them in income. This rule applies to:<\/p>\n

    \n
  1. Divorce and separation agreements executed after December 31, 2018, and<\/em><\/li>\n
  2. Earlier divorce and separation agreements that are modified after December 31, 2018, but only<\/em> if the modification states that the new law applies.<\/li>\n<\/ol>\n

    This means that if your divorce decree was finalized by December 31, 2018, tax reform does not impact your alimony and there are no changes for you. If you\u2019re the one paying alimony, you still can deduct it. If you\u2019re the one receiving alimony, you must still include it in gross income on your tax return.<\/p>\n

    Tax Reform, Alimony and Considerations for Older Divorce Decrees<\/h2>\n

    Going forward, if you change your decree any time after 2018, the old rules still apply unless you add a change that specifically states<\/em> that Section 11051 of the Tax Cuts and Jobs Act<\/a> (TCJA) applies.<\/p>\n

    Why would you wish to adopt the tax reform rules so that alimony is no longer deductible or taxable? It could be that you agree the deduction isn\u2019t that important to one of you and the tax is an unfair burden on the other. This is something that you, your former spouse and your respective attorneys need to discuss.<\/p>\n

    Just keep in mind that if you change your decree, but don\u2019t reference Section 11051 of the TCJA, everything stays as it was. One more thing: you can\u2019t fix it so that one gets a deduction but the other doesn\u2019t pay tax!<\/p>\n

    The option to apply the new law (or not) works only for individuals who have decrees or agreements in effect before 2019. Starting January 1, 2019, any new decree or separation agreement is automatically covered by the new law.<\/p>\n

    TCJA, Alimony and Beyond<\/h2>\n

    The TCJA did not make any changes to the definition of alimony for tax purposes or to the legal definition of a divorce or separation agreement. For instance, property settlements are not alimony. Nor are child support payments. For a full explanation and list, see the \u201calimony\u201d section in IRS Pub. 504<\/a>, Divorced or Separated Individuals.<\/p>\n

    Another important consideration in divorce is who gets to claim the children. A divorce decree typically indicates that one parent is the custodial parent and the other is the noncustodial parent. Even if the decree says the parents have joint custody, under tax law and regulations, the custodial parent is the parent with whom the child spends the most nights during the year, even if it\u2019s just for one more night than the other parent.<\/p>\n

    The custodial parent may sign a release, Form 8832<\/a> to transfer the child\u2019s exemption to the noncustodial parent. In the past, that meant the noncustodial parent got to claim the exemption and, if the child was under 17, the child tax credit. Under the TCJA, although Form 8332 is still called an exemption release, the exemption is now $0. Even so, things still work the same way. If you\u2019re the one releasing your child\u2019s exemption, your spouse still gets to claim the child tax credit, which is now up to $2,000. If your child is 17 or older before the end of the year, your spouse gets the new $500 credit for other dependents.<\/p>\n

    In any case, as under prior law, and regardless of what your decree says, the 8332 release is needed for the noncustodial parent to claim these child-connected tax benefits. If you\u2019re not certain about what is in your decree or how it works, it\u2019s a good idea to consult with your attorney.<\/p>\n

    Looking for Help Understanding Alimony and Tax Reform Changes for 2018?<\/h2>\n

    The Tax Cuts and Jobs Act includes hundreds of changes that affect nearly every taxpayer. You can learn more about how these changes could impact you in our Tax Reform Center.<\/a><\/p>\n

    If you\u2019re looking for personal assistance, find a local tax office<\/a> to schedule an appointment with an H&R Block tax pro.<\/p>\n","protected":false},"excerpt":{"rendered":"

    After tax reform, an ex-spouse who pays alimony can no longer deduct alimony payments, and the ex-spouse receiving the payments no longer must include them in income. This rule applies to: Divorce and separation agreements executed after December 31, 2018, and Earlier divorce and separation agreements that are modified after December 31, 2018, but only […]<\/p>\n","protected":false},"author":588,"featured_media":43774,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[25,13040],"tags":[],"class_list":["post-43773","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-irs","category-tax-reform"],"acf":[],"yoast_head":"Alimony and Tax Reform | H&R Block<\/title>\n<meta name=\"description\" content=\"Learn more about how tax reform has changed the rules for alimony with the tax experts at H&R Block. 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